What is the SIE Exam?

As mentioned in our previous post, What is on the Series 7 exam, the FINRA has restructured the examination process and implemented a new exam, the Securities Industry Essential exam (“SIE”).  On October 1, 2018, the SIE exam will become a prerequisite to all of the FINRA’s representative-level qualification exams (“rep-level exams”).

PURPOPSE OF THE SIE EXAM

The purpose of the SIE exam is to eliminate the testing of duplicate information that is provided on the rep-level exams.  To accomplish this, the duplicate content will be pulled out of the rep-level exams, and will be tested only on the SIE exam.  According to FINRA, the content tested will be on fundamental securities-related knowledge, including knowledge of basic products, the structure and function of the securities industry, the regulatory agencies and their functions and regulated and prohibited practices.

SPONSORSHIP AND LAPSE PERIOD

Although FINRA is requiring an additional exam, there is good news for those who want to get into the securities industry.   Unlike the rep-level exams, the SIE exam does not require sponsorship from a FINRA member firm.  Therefore, members of the general public can schedule and sit for the exam at any time.  Also, the SIE exam has a longer lapse period than the rep-level exams.  The SIE exam is subject to a four-year expiration period instead of two years.  Therefore, applicants who pass the SIE exam should have enough time to find sponsorship from a FINRA member firm to take one of the rep-level exams.  However, if an individual is unable to find sponsorship within four years, they are required to take the SIE exam again.

TEST DETAILS

Since the SIE exam only tests on fundamental securities-related knowledge, it is a short exam, comprised of 75 questions.  Test takers who fail the exam are required to wait 30 days before retaking the exam.  If a test taker fails more than three times within a two-year period, a 180-day waiting period is triggered. For test takers who prefer to take the SIE exam on the same day as the rep-level exam and have sponsorship from a firm, the rules do allow it.

IMPACT ON REPRESENTATIVE-LEVEL QUALIFICATION EXAMS

Passing the SIE exam, although an accomplishment, does not qualify a person for FINRA registration. To become registered with FINRA, you are still required to pass a rep-level exam.   The current rep-level exams consists of the Series 6, Series 7, Series 22, Series 57, Series 79, Series 82, Series 86/87, and Series 99.  As a result of the SIE exam, all rep-level exams will become shorter and focus on unique content.  For example, the Series 7 exam currently has 250 questions.  Beginning October 1, 2018, the Series 7 exam will be reduced to 125 questions.  As another example, the Series 22 exam currently has 100 questions but will be reduced to only 50 questions.

IMPACT ON PREVIOUSLY REGISTERED REPRESENTATIVES

The restructure on the examination process will have an impact on those who allow their registration to lapse.  If four or more years have passed since an applicant was last registered, then he or she will be required to take the SIE exam and one of the rep-level exams.  Therefore, those who have already allowed their registration to lapse, should strategically decide when they want to apply for re-registration with FINRA.  The timing of the application will make a difference between one exam or two short exams.

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