Key Takeaways
- Qualifies supervisors of FINRA broker-dealer activities.
- Requires passing SIE plus Series 7 or 79 exams.
- Covers trading, sales, compliance, and investment banking supervision.
- Exam: 150 questions, 70% passing score, 3h 45m.
What is Series 24?
The Series 24 exam, known as the General Securities Principal Qualification Examination, certifies individuals to supervise key activities within FINRA-member broker-dealers, including trading, investment banking, and operations. While it authorizes supervision, it does not permit direct securities sales, which require separate licenses such as the Series 7.
Passing the Series 24 is essential if you aim to oversee registered representatives or manage compliance in a broker-dealer environment, a role often held by executives and C-suite professionals.
Key Characteristics
The Series 24 license focuses on supervisory responsibilities with a rigorous exam structure. Key points include:
- Scope of Supervision: Covers trading, sales, advertising, investment banking, and operational functions under FINRA rules.
- Exam Content: 150 multiple-choice questions with a 70% passing score, spanning five job functions such as broker-dealer registration and market making.
- Prerequisites: Requires sponsorship by a FINRA member firm and passing the Securities Industry Essentials (SIE) plus a representative-level exam.
- Continuing Education: Annual compliance meetings and computer-based training ensure principals stay current with regulatory changes and firm policies.
- Regulatory Focus: Emphasizes compliance with SEC, FINRA, and state requirements, including documentation like Forms U4 and U5.
How It Works
To take the Series 24 exam, you must be employed and sponsored by a FINRA-registered firm, reflecting the exam’s supervisory nature. The test evaluates your knowledge of regulatory frameworks, operational controls, and supervisory protocols essential for managing broker-dealer operations.
Once licensed, you are responsible for overseeing complex processes such as trade approvals, advertising compliance, and customer account supervision. The role demands familiarity with data analytics to monitor trading activities and identify potential violations effectively.
Examples and Use Cases
Series 24 principals play critical roles in various financial firms and industries. Examples include:
- Airlines: Compliance officers at Delta monitor employee securities activities to prevent conflicts of interest.
- Investment Firms: Supervisors at broker-dealers overseeing sales and trading desks ensure adherence to best execution and regulatory reporting.
- Startups and Fintechs: Executives managing securities offerings or marketing strategies must understand supervisory requirements to comply with SEC rules.
- Portfolio Management: Principals coordinate with investment adviser representatives to align firm policies across advisory and brokerage services.
Important Considerations
Obtaining the Series 24 license is a significant step toward leadership in broker-dealer compliance and supervision but requires ongoing commitment to education and regulatory updates. Since the exam covers broad and detailed supervisory topics, thorough preparation is critical.
Additionally, firms benefit from principals who integrate technology and best online brokers resources to streamline oversight and enhance customer protections. Understanding paid-in capital and financial responsibility rules also supports effective management of broker-dealer capital requirements.
Final Words
Passing the Series 24 exam is essential for overseeing key broker-dealer functions but requires prior qualification and sponsorship. If you're pursuing a supervisory role, start by confirming your eligibility and preparing thoroughly for the exam’s broad regulatory scope.
Frequently Asked Questions
The Series 24 exam, also known as the General Securities Principal Qualification Examination, qualifies individuals to supervise key activities at FINRA-member broker-dealers, including trading, investment banking, sales, and operations. However, it does not authorize direct securities sales, which require separate licenses like the Series 7.
Anyone who supervises registered representatives or regulated functions at a FINRA-member firm typically needs the Series 24 license. This includes roles like Chief Compliance Officers, Sales Managers, and Trading Desk Managers, where supervisory responsibilities are involved.
Candidates must be sponsored by a FINRA member firm and have passed the Securities Industry Essentials (SIE) exam plus a representative-level exam such as Series 7 or Series 79. Alternatively, passing the Series 16 Supervisory Analyst exam also meets the prerequisite requirements.
The exam consists of 150 scored multiple-choice questions and additional unscored pretest items, with a time limit of 3 hours and 45 minutes. Candidates must score at least 70%, or 105 correct answers, to pass, covering five main supervisory job functions.
The exam covers supervision of broker-dealer registration, general broker-dealer activities, retail and institutional customer activities, trading and market making, and investment banking and research. It focuses on supervisory rules, regulatory compliance, and operational integrity.
After passing, principals must complete ongoing continuing education, including an annual compliance meeting, firm-specific training, and a computer-based program within 120 days of their second registration anniversary, then every three years thereafter.
No, the Series 24 license authorizes supervisory functions but does not permit direct securities sales. To sell securities, one must hold a representative-level license such as the Series 7.
