What is Series 57?
The Financial Industry Regulatory Authority (FINRA) conducts an examination known as Series 57, also referred to as the Securities Trader Representative Exam. Passing the Series 57 exam is a requirement for those who wish to become professional traders of either equities or convertible debt securities.
How Series 57 Works
By verifying that professional traders fulfill a minimum level of professional knowledge and skill, the Series 57 test safeguards the public. Prospective traders must also pass the Securities Industry Essentials (SIE) test and the Series 57 exam. Entry-level traders are certified to execute over-the-counter (OTC) and Nasdaq exchange trading as well as proprietary trading operations after completing both.2. The technology and procedures used by professional securities traders today are reflected in the architecture of the test. As a result, the interviewees for its queries are trading businesses and actual practitioners in the industry. By keeping the exam updated with new advancements in the field, FINRA guarantees that individuals who pass the test will be prepared to deal professionally and morally soundly with the public. Candidates must be associated with and sponsored by a FINRA member firm or another self-regulatory organization (SRO) to sit for the test. To register as a securities trader, the applicant must further pass the SIE.
Over the year, the test has undergone several revisions to reflect continuing developments in the business. In January 2017, the test was significantly modified by adding new parts about high-frequency trading, or HFT. This action was taken in response to many press reports detailing unethical practices by some HFT businesses. This change only affects new Series 57 applicants; those who passed earlier exam iterations are not required to retake it using the updated content.
An illustration of Series 57
Dorothy works as an intern at a financial company that manages investments on behalf of its customers. During her internship, Dorothy learned from the company’s authorized traders and became interested in trading equities and convertible debt instruments. She also developed an interest in algorithmic trading strategies like HFT.
Dorothy is not authorized to participate directly in these exchanges as an intern. Consequently, she has decided to sit for the Series 57 and SIE tests to further her profession. She has 105 minutes to complete 50 multiple-choice questions and must correctly answer at least 70% of them to pass the test. There is just one correct response for each question, and they vary in complexity. Of these, 82% of the questions deal with trading operations, while the other 18% concern administrative tasks like keeping records and correctly reporting deals.
Dorothy may seek a career as a trader of equities and convertible debt securities after earning her Series 57 and SIE licenses. Because of this, she sees the 57 and SIE exams as crucial first steps in her future profession.
Conclusion
- Exam Series 57 is a crucial test for anyone working in finance.
- Anyone who wants to trade equity and convertible debt instruments must pass the test.
- FINRA is responsible for administering the 50 multiple-choice questions comprising its content, often updated to reflect new laws and technological developments that impact the sector.
