FINRA Series 56 EXAM – Proprietary Trader Examination
Last Updated: 9/8/2011 20:33PM
9/1/2011: The deadline has been extended to October 29, 2011. All CBOE/CBSX traders that do not meet licensing requirements will not be able to trade after 10/29/2011 until proper licensing is obtained.
7/8/2011: Update to Regulatory Circular RG11-077 Extension of Registration and Qualification Examination Deadline and Additional Information Regarding the Waiver Process - http://www.prop-trading.com/wp-content/uploads/2011/07/RG11-088-2.pdf
6/29/2011: RG11-077 New WebCRD Registration Categories and Related Qualification Exams (Series 56 in this case) Exemptions and the Waiver Process - http://www.prop-trading.com/wp-content/uploads/2011/06/RG11-077-New-WebCRD-Registration-Categories-and-Related-Qualification-Exams-Exemptions-and-the-Waiver-Process.pdf
View the FINRA Series 56 Proprietary Traders Qualification Examination Content Outline – http://www.prop-trading.com/wp-content/uploads/2011/06/Series56ContentOutline.pdf
Proprietary traders and market makers will soon be taking the new Series 56 Examination. The deadline for licensing is now September 19, 2011, unlike the Series 7 exam, this new exam will focus on trading-specific topics, according to Peter Chapman of Traders Magazine. The good news is, traders with a Series 7 license can apply for a waiver.
“The test will capture all of the generic types of questions that any equities or options trader should know. If you don’t know this, you should not be in control of sending orders to an exchange.” — Box Options Exchange SVP Alan Grigoletto.
Mr. Grigoletto is in charge of business development and marketing at the exchange, and is on the inter-exchange committee that’s developing exam questions. BOX is working with these other exchanges – CBOE, NYSE’s Arca and Amex, Nasdaq OMX Group, NSX, Direct Edge, and ISE.
Series 56 v. Series 7, And the Likelihood of Waivers:
Mr. Chapman notes that traders typically must take the Series 7 exam and/or an Exchange house exam – e.g., Nasdaq’s Series 55 exam, NYSE Amex’s Series 48 exam, NYSE Arca’s Series 44 exam. Most house exams will likely be superseded, though some exchanges may administer it to new traders. The Series 7 exam, which is geared primarily to retail stock brokers, is lengthy and covers an array of brokerage topics – most are irrelevant to the world of trading.
Traders and market makers, who currently are required to hold the Series 7 License, are hoping they can waive the nse Series 56 exam. Though the issue has not been settled, Grigoletto and officials at CBOE say a waiver for the Series 7 is a good possibility. The waiver likely would not apply to new traders, however.
It’s also not clear whether regulators will make any distinction between market makers and prop traders. After all, the Series 56 exam is also known as the Proprietary Traders Exam.
Scope of the Series 56 Exam:
FINRA will administer the Series 56 exam. The length of the test and the number of questions are not known, but many FINRA-administered tests take about 3 hours to complete and include about 100 questions. The Series 7 exam, by contrast, includes 250 questions and takes a total 6 hours to finish. Among the topics on the exam: concentration monitoring, closing out errors, Reg. SHO, expiring exercise declarations, and exercise limits.
Proprietary Trader Examination – (Series 56):
100 multiple choice questions; 2 ½ hours testing time. This examination qualifies an individual to conduct business as a proprietary trader with certain exchanges. These exchanges include the Chicago Board Options Exchange (CBOE), C2, The International Stock Exchange (ISE), and the National Stock Exchange (NSX).FINRA does not recognize this exam under its registration rules.
Read the FINRA notice: Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt the Selection Specifications and Content Outline for the Proprietary Traders Examination Program (Series 56)
“Traders, Market Makers: The Series 56 Exam.” Rule News. Web. 28 June 2011. <http://complianceinsights.typepad.com/rule_news/2011/02/traders-market-makers-the-series-56-exam.html>.
“Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt the Selection Specifications and Content Outline for the Proprietary Traders Examination Program (Series 56).” Federal Register. Web. 28 June 2011. <http://www.federalregister.gov/articles/2011/06/23/2011-15670/self-regulatory-organizations-chicago-board-options-exchange-incorporated-notice-of-filing-and>.
“FINRA – FINRA Registration and Examination Requirements.” FINRA – Home Page. Web. 28 June 2011. <http://www.finra.org/industry/compliance/registration/qualificationsexams/registeredreps/p011051>.
“FINRA Series 56 Content Outline.” Financial Industry Regulatory Authority (FINRA). United States Register, 29 June 2011. Web. 29 June 2011. <https://www.cboe.org/examwaiver/Series56ContentOutline.pdf>.