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How Series 6, 79 and 99 Examinations will Change When the SIE Exam Goes Live

Posted by: Doug Vincens, Securities Product Director
Published: April 3, 2018

The SEC recently approved a proposed rule change to restructure the FINRA representative-level qualification examination programs. The rule change, which will become effective on October 1, 2018, restructures the examination programs into a new format whereby all new representative-level applicants will be required to take a general knowledge examination (the Securities Industry Essentials, or SIE) and a tailored, specialized knowledge examination (a revised representative-level qualification examination) for their particular registered role.

As part of the 2018 restructuring process, FINRA has reviewed the Investment Company and Variable Contracts Products Representative (Series 6), the Investment Banking Representative (Series 79), and the Operations Professional (Series 99) examinations and has proposed to remove the general securities knowledge currently covered on the examinations. Instead, FINRA will create tailored examinations to test knowledge relevant to the day-to-day activities, responsibilities, and job functions of those individuals.

Revised Series 6 Breakdown

FINRA is proposing changes to the major job functions that are performed by an Investment Company and Variable Contracts Products Representative (Series 6). The following are the revised job functions, denoted Function 1 through Function 4, with the associated number of questions:

  • Function 1: Seeks Business for the Broker-Dealer from Customers and Potential Customers, 12 questions; 24% of exam items;
  • Function 2: Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives, 8 questions; 16% of exam items;
  • Function 3: Provides Customers with Information About Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records, 25 questions; 50% of exam items; and
  • Function 4: Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions, 5 questions; 10% of exam items.

In addition, beginning on October 1, 2018, new applicants seeking to register as a representative must pass both the Securities Industry Essentials (SIE) examination and the revised examinations.

As a result of the proposed changes, the number of scored questions on the Series 6 examination will be reduced from 100 questions to 50 questions. Consistent with FINRA’s practice of including “pretest” questions on examinations, the Series 6 examination includes five additional, unidentified pretest questions that do not count towards the candidate’s score. Further, the test time, which is the amount of time candidates will have to complete the examination, will be reduced from 2 hours and 15 minutes to 1 hour and 30 minutes.

All candidate test scores are placed on a common scale using a statistical adjustment process known as equating. Equating scores to a common scale accounts for the slight variations in difficulty that may exist among the different sets of exam items (questions) that candidates receive. This allows for a fair comparison of scores and ensures that every candidate is held to the same passing standard regardless of which set of questions they received. Currently, a score of 70 percent is required to pass the examination. FINRA will publish the passing score of the revised Series 6 examination on its website, at www.finra.org, prior to its first administration.

Download A Candidate's Complete Guide to the New SIE Exam now to learn more about the new proposed licensing process and SIE exam content.

Revised Series 79 Breakdown

The Series 79 exam is designed to assess the competency of entry-level Investment Banking Representatives and seeks to measure the degree to which each candidate possesses the knowledge, skills, and abilities needed to perform the critical functions of an Investment Banking Representative.

FINRA is proposing to reorganize the content outline by dividing it into three major job functions that are performed by an Investment Banking Representative. The following are the three major job functions, denoted Function 1 through Function 3, with the associated number of questions:

  • Function 1: Collection, Analysis and Evaluation of Data, 37 questions;
  • Function 2: Underwriting and New Financing Transactions, Types of Offerings and Registration of Securities, 20 questions; and
  • Function 3: Mergers and Acquisitions, Tender Offers and Financial Restructuring Transactions, 18 questions.

The questions on the revised Series 79 examination will place emphasis on tasks such as advising on or facilitating debt or equity offerings through a private placement or public offering, and advising or facilitating mergers and acquisitions, tender offers, financial restructurings, and asset sales.

Each function also includes specific tasks describing activities associated with performing that function. There are three tasks (1.1–1.3) associated with Function 1; six tasks (2.1–2.6) associated with Function 2; and six tasks (3.1–3.6) associated with Function 3. For example, one such task (Task 1.3) is conducting due diligence. Further, the content outline lists the knowledge required to perform each function and associated tasks (e.g., due diligence processes on both the buy- and sell-sides). In addition, where applicable, the content outline lists the laws, rules, and regulations a candidate is expected to know to perform each function and associated tasks (e.g., SEC Rule 135a).

Structure of the New Series 79 Exam 

The Revised Series 79 Exam consists of 75 multiple-choice questions.
Function 1: Collection, Analysis, and Evaluation of Data49%37 questions
Function 2: Underwriting and New Financial Transactions, Types of Offerings, and Registration of Securities27%20 questions
Function 3: Mergers and Acquisitions, Tender Offers and
Financial Restructuring Transactions
24%18 questions
TOTAL100%75 questions

 

 

 

 

 

 

Each candidate’s exam includes 10 additional, unidentified pretest items that do not count toward the candidate's score. Therefore, each candidate’s exam consists of a total of 85 questions (75 scored and 10 unscored). Candidates will be allowed 2 hours and 30 minutes to complete the Series 79 exam.

All candidate test scores are placed on a common scale using a statistical adjustment process known as equating. Equating scores to a common scale accounts for the slight variations in difficulty that may exist among the different sets of exam items that candidates receive. This allows for a fair comparison of scores and ensures that every candidate is held to the same passing standard regardless of which set of exam items they received.

Revised Series 99 Breakdown

The plan is to reorganize the Series 99 content outline by dividing it into two major job functions that are performed by an Operations Professional. The following are the two major job functions, denoted Function 1 and Function 2, with the associated number of questions:

  • Function 1: Knowledge Associated with the Securities Industry and Broker-Dealer Operations, 35 questions; and
  • Function 2: Professional Conduct and Ethical Considerations, 15 questions.

The questions on the revised Series 99 examination will place emphasis on tasks. There are nine tasks (1.1–1.9) associated with Function 1 and four tasks (2.1–2.4) associated with Function 2.

For example, one such task (Task 1.1) is opening and maintaining accounts. Further, the content outline lists the knowledge required to perform each function and associated tasks (e.g., types of retail, institutional, and prime brokerage customer accounts). In addition, where applicable, the content outline lists the laws, rules, and regulations a candidate is expected to know to perform each function and associated tasks [e.g., SEA Rule 15c3-3 (Customer Protection—Reserves and Custody of Securities)].

As a result of the proposed changes, the number of scored questions on the Series 99 examination will be reduced from 100 questions to 50 questions. Further, the test time, which is the amount of time candidates will have to complete the examination, will be reduced from 2 hours and 30 minutes to 1 hour and 30 minutes (90 minutes). Currently, a score of 68 percent is required to pass the examination. FINRA will publish the passing score of the revised Series 99 examination on its website prior to its first administration.

Consistent with FINRA’s practice of including “pretest” questions on examinations, the Series 99 examination includes five additional, unidentified pretest questions that do not count towards the candidate’s score.

The exam consists of 50 multiple-choice items, and each item consists of four answer choices. The allocation of exam items for each major function is as follows:

Function 1: Knowledge Associated with the Securities Industry and Broker-Dealer Operations70%35 questions
Function 2: Professional Conduct and Ethical Considerations30%15 questions
TOTAL100%50 questions

 

 

 

 

All candidate test scores are placed on a common scale using a statistical adjustment process known as equating. Equating scores to a common scale accounts for the slight variations in difficulty that may exist among the different sets of exam items that candidates receive. This allows for a fair comparison of scores and ensures that every candidate is held to the same passing standard regardless of which set of exam items they received.

Now that you've gotten a deeper look at how Series 6, 79, and 99 will be affected, learn more abou how the SIE exam will impact the Series 7 licensing exam

A Candidate's Complete Guide to the New SIE Exam Free eBook - Kaplan Financial EducationA Candidate's Complete Guide to the New SIE Exam

After identifying nine series exams with common content (6, 7, 22, 57, 79, 82, 86/87, 99), FINRA has decided to restructure their licensing process next year. The common content will be tested in the new Securities Industry Essentials (SIE) exam. Download this free guide to learn more about how the new securities licensing process will work, the rationale for the change, proposed SIE exam content, and how it could change hiring and recruiting practices.

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