Series 57

Previously known as the Series 55, the Series 57 is an exam and license administered by the Financial Industry Regulatory Authority (FINRA). Also known as the Securities Trader Representative Exam, it is required for individuals looking to be a securities trader representative. These individuals can trade equity and convertible debt securities.

To become a securities trader representative, individuals must pass the Series 57 and the Securities Industry Essentials (SIE). With the Series 57, individuals can do NASDAQ trading, over-the-counter (OTC) equity trading, and proprietary trading.

The Series 57 exam is meant to assess the competency of entry-level equity traders. Its intent is to protect the investing public by helping to ensure that equity traders possess the competency to perform their jobs. The Series 57 measures the “degree to which each candidate possesses the knowledge, skills, and abilities needed to perform the critical functions of an equity trader,” per FINRA. 

The Series 57 exam’s contents were developed based on an equity trader job analysis study, which included required knowledge, specific tasks, and job functions. The study entailed data collection as well as surveys of a wide variety of firms.

Candidates must be associated with and sponsored by a FINRA member firm to be eligible to take the Series 57 exam. The SIE exam is a corequisite, with candidates having to pass both exams to become registered as a securities trader.

Any person developing or designing an algorithmic trading strategy or overseeing such activities must pass the Series 57. Requiring Series 57 ensures that someone at a firm can identify and register as having knowledge of—and responsibility for—the trading strategy and technology used. 

The Series 57 exam consists of 50 multiple-choice questions. Candidates are allocated 105 minutes to complete it and must correctly answer at least 70% of the questions to pass.

Exam questions vary in degree of complexity and difficulty. Each question has only one best answer. They are frequently changed as regulations are amended and new products are introduced, so candidates should keep abreast of changes in applicable rules and regulations.

Each scored question is worth a single point. As there is no penalty for guessing, Series 57 candidates should answer every question, which cover the following content subjects:

• Trading activities, making up 82% of the exam (41 questions)
• Maintaining books and records, trade reporting, and clearance and settlement, making up 18% of the exam (nine questions)

The Series 57 exam is administered by computer. Candidates aren’t allowed any reference material but are given scratch paper and basic electronic calculators (some of the exam’s questions involve calculations). FINRA’s resource On the Day of Your Qualification Examination has further information on the exam’s rules and procedures.

The Series 55 became the Series 57 in January 2016, as a way to address high-frequency trading. The aim was to help regulate the behavior of high-frequency trading firms. The new rule forces broker-dealer firms to register with FINRA. Those who passed the Series 55 or Series 56 before the change to Series 57 are grandfathered in and don’t have to take Series 57.