Series 24

The Series 24 examination is for financial professionals planning to obtain a license for managing and supervising general securities at a broker-dealer. Other supervisory roles involve regulatory compliance over underwriting, trading, market-making, and advertising. It is developed and conducted by the Financial Industry Regulatory Authority or FINRA.

It is also referred to as the General Securities Principal Qualification Examination, and those who pass it earn the title of General Securities Principal. The examination evaluates the examinee’s ability to execute the job by assessing their competencies and understanding. The assessment consists of 150 multiple-choice questions and requires the depth of knowledge on real estate investment trusts, investment banking, corporate securities, trading, etc.

• Series 24 is a license entitlement sought by a financial professional to manage and supervise the general securities for a broker-dealer. The Financial Industry Regulatory Authority or FINRA prepares and administers the exam.
• The General Securities Principal Qualification Examination consists of 150 multiple-choice questions on real estate investment trusts, investment banking, corporate securities, trading, etc.
• The candidate must be affiliated with and sponsored by a member firm of FINRA or another self-regulatory organization (SRO).
• Qualifying candidates will be eligible to conduct supervisory activities involving regulatory compliance over underwriting, trading, market-making, and advertising.

Let us have a quick look at different aspects of Series 24:

FINRA administers the Series 24 licensing exam to assess a candidate's competence to perform as a General Securities Principal. It is difficult enough for candidates to qualify. Also, the assessment pattern is different from other financial certifications and entitlements. Furthermore, only after passing the Securities Industry Essentials (SIE) Exam and the Supervisory Analysts Exam (Series 16) exam, or a representative-level qualifying exam, can a candidate qualify for principal registration.

The questions are prepared based on real-life instances and necessitate in-depth knowledge of the topics, such as rules and statutory provisions in managing and supervising general securities for a broker-dealer. As a result, deducing answers from theoretical knowledge hardly works.

The test is developed based on the job duties that the candidate would be handling after they qualify as General Securities Principal. It ensures the qualifying candidate would be the best fit for the job. It comprises five sections, depending on the post-qualification functional areas of the candidates:

Function 1: Supervision of Registration of the Broker-Dealer and Personnel Management Activities

• Difference between the U.S. Securities and Exchanges Commission (SEC) and self-regulatory organization (SRO) regulatory requirements, pre-requisites, and exemptions
• Difference between a Registered Investment Advisor (RIA) and Broker-Dealer (BD)
• Registrations, exemptions, and hiring requirements for specific principal positions depending on the background, financial history, disciplinary clauses, etc

Function 2: Supervision of General Broker-Dealer Activities

• Periodic inspections and reviews of activities performed by personnel at the Office of Supervisory Jurisdiction or OSJ and associated units
• Developing, testing, and implementing policies and procedures for firms to conduct various operations
• Regulatory requirements to resolve conflicts of interest
• Supervise a firm’s disciplinary actions, account records, compensation, and development and delivery of broker-dealer products and services
• All rules and laws associated with personal trading or securities transactions, etc

Function 3: Supervising Retail & Institutional Customer-Related Activities

• Requirement of collecting customer information for future use
• Supervision of new and existing accounts, public communication, transactions, and disclosures
• Verifying accounts to make sure they comply with the Customer Identification Program or CIP
• USA Patriot Act, Bank Secrecy Act, Office of Foreign Assets Control, etc
• Measures to identify suspicious elements’ intervention and their prevention

Function 4: Supervision of Trading & Market Making Activities

• Requirements to be fulfilled to operate as a trader
• Market-making activities, including quoting, etc
• Trading activities that are prohibiting
• Supervision of order entry, executions, bookkeeping, and trade settlements
• Compliance with the SEC regulations SHO and NMS, etc
• Restrictions related to trading activities, etc

Function 5: Supervision of Investment Banking & Research

• Regulations governing public and private offerings
• Documentation requirements
• Policymaking and reviewing of a firm’s investment banking activities and disclosures
• Communication rules related to the new issues that arise
• Generating and reviewing corporate annual and quarterly reports

Out of 150 questions divided into these five sections, candidates must answer 105 questions (70%) correctly to qualify. To know the number of questions in each category, you can refer to the exam structure row of the table above.

The first Series 24 eligibility requirement for the candidate is to being affiliated with and sponsored by a member firm of FINRA or another self-regulatory organization (SRO). Next, the candidate must pass the Securities Industry Essentials (SIE) Exam and the Supervisory Analysts Exam (Series 16) exam, or one of the following representative-level qualifying exams to qualify for principal registration:

• Series 7 or General Securities Representative exam 
• Series 17 or United Kingdom Module of Series 7
• Series 37 or 38 or Canada Module of Series 7
• Series 57 or Securities Trader Representative exam
• Series 62 or Corporate Securities Limited Representative exam
• Series 79 or Investment Banking Representative exam
• Series 82 or Private Securities Offerings Representative exam
• Series 86, 87, or Research Analyst exam
• Series 16 or the Supervisory Analysts exam 

Here are a few pointers candidates might use to be more acceptable in their approach when answering questions in the General Securities Principal Qualification Examination:

• Stay up to date on financial news and the market. 
• Seek the guidance of an expert.
• Refer to study materials with sample questions.
• Go through the questions per section quickly.
• Start attempting the questions one by one.
• Read the questions carefully, do not forget to focus on the ‘NOTs’ in the question.
• Eliminate the options that could not be the answers.
• Choose the right one from the remaining alternatives.
• Be aware of the terms used in the trading and market-making to ensure answering questions correctly.

There are no penalty marks. Hence, there is no harm in going for guesswork. However, sometimes reading the questions is enough to answer them correctly.

This has been a guide to what is Series 24. Here we discuss Series 24 details, functions, and how to prepare it along with eligibility and pre-requisites. You may also have a look at the below articles -

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