What Is the Series 24 Exam? Eligibility, Format, and Requirements

The Series 24 Exam, also known as the General Securities Principal Qualification Examination, is a critical step for individuals aiming to become registered principals in the securities industry. It evaluates a candidate’s knowledge of regulatory compliance and firm operations, essential for supervisory roles within broker-dealer firms.

Eligibility Criteria for the Exam

To take the Series 24 Exam, candidates must be associated with a FINRA-member firm, which ensures active participation in the securities industry. Candidates are also required to hold or be in the process of obtaining a qualifying prerequisite registration, typically the Series 7 Exam, which provides a foundation in securities products and markets. Sponsorship by the employing firm is mandatory, signifying the firm’s endorsement of the candidate’s qualifications for a supervisory role.

Exam Format and Sections

The Series 24 Exam assesses proficiency in securities regulation and firm management, divided into sections that focus on supervisory responsibilities and regulatory knowledge.

Supervision of Brokerage

This section covers oversight responsibilities within a brokerage firm, including compliance with industry standards. Candidates must understand supervisory procedures, such as establishing and maintaining written supervisory procedures (WSPs) as required by FINRA Rule 3110. They should also be familiar with conducting internal inspections, addressing customer complaints, and implementing corrective actions to ensure adherence to regulations.

Regulatory Guidelines

This section examines knowledge of the regulatory environment, including the Securities Exchange Act of 1934, which established the SEC. Candidates must understand reporting and disclosure requirements, insider trading rules, and the role of self-regulatory organizations like FINRA. Knowledge of the Code of Arbitration Procedure and the Code of Procedure is also necessary for handling disputes and disciplinary actions.

Firm Operations

This section focuses on managing a brokerage firm’s operations, including compliance with the Net Capital Rule (SEC Rule 15c3-1) and the Customer Protection Rule (SEC Rule 15c3-3). Candidates should be familiar with trade clearing and settlement processes and maintaining accurate records as mandated by SEC Rule 17a-3.

Passing Score and Time Limits

The Series 24 Exam requires a passing score of 70%. It consists of 150 multiple-choice questions, with a four-hour time limit. Effective time management and familiarity with the exam structure are essential for success.

Retake Requirements

Candidates who fail the Series 24 Exam must wait at least 30 days before retaking it. After three consecutive failures, the waiting period increases to 180 days. This time allows candidates to reassess their preparation strategies and focus on areas of weakness. Performance reports highlighting strengths and weaknesses can help guide study efforts more effectively.