What is Series 3?
The Financial Industry Regulatory Authority (FINRA) administers the Series 3 test, commonly known as the National Commodities Futures Examination, on behalf of the National Futures Association (NFA). Upon passing the test, candidates may sell commodity futures contracts and options on commodity futures contracts and register with the NFA. FINRA offers a variety of tests for investment professionals, such as the Series 7 General Securities Representative Exam, which brokers must pass to sell corporate, government, or other securities.
How Series 3 Works
Commodity brokers must pass the Series 3 test, which includes options, futures, hedging, margin requirements, and market and regulatory guidelines. Examinees get two hours and thirty minutes to finish the two halves of 120 multiple-choice questions. In contrast to the Series 7 test, applicants may take the exam without needing a company sponsor.
To pass the test, candidates must score about 70% in each section. (The commonly acknowledged pass percentage is about 70%; nevertheless, there is no official pass rate.) They may retake the test if they don’t pass, although there can be a waiting time. The examination is $130.
Passing the Series 3 test is a requirement for anybody wishing to trade commodity futures contracts.
The NFA, which is in charge of regulating the U.S. derivatives market, says that anyone who wants to become a member as a futures commission merchant (FCM), retail foreign exchange dealer (RFED), introducing broker (IB), commodity pool operator (CPO), commodity trading advisor (CTA), leverage transaction merchant (LTM), or as an associated person (AP) of these entities must meet certain proficiency requirements.
Most of the time, applicants who want to register as affiliated persons or become members of the NFA must first pass the test within the previous two years. That is, unless…
At the moment, the person is registered as a floor broker.
The applicant completed the examination more than two years before applying, and ever since, they have not had a longer than two-year break in their registration as an NFA-member AP, FB, FCM, IB, CPO, CTA, or LTM.
The FINRA website is where applicants must apply online to register for any future industry tests. FINRA usually notifies the NFA immediately when someone passes one of the industry tests for the future. However, there are situations where the NFA could ask applicants to provide documentation of their passing scores.
Other options
Depending on their registration status and the kind of company they work for, people may be able to pursue alternative registration choices and take other tests instead of Series 3. Among them are the following: Series 31 Futures Managed Funds Examination
Regulations for the Limited Futures Examination (Series 32)
Series 30 (NFA Branch Manager Examination) and Series 34 (Retail Off-Exchange Forex Examination) are further certification tests associated with Series 3.
Series 3 is not a requirement or corequisite for these other tests.
Visit the NFA’s Proficiency Requirements website for further details on Series 3 and other future industry tests. Additionally, go to FINRA’s On the Day of Your Qualification Exam web page for additional information on how to take the exam.
Conclusion
- The Financial Industry Regulatory Authority (FINRA) administers the Series 3 test on behalf of the National Futures Association (NFA), the self-regulatory body for the derivatives market in the United States.
- To sell commodity futures contracts and options on commodity futures contracts, candidates must register with the NFA after passing the Series 3 test.
- People may take many tests instead of Series 3 to be qualified to operate in the commodities and futures markets.
