Futures Industry Examinations
While an exam is not required to trade futures for one's own account through a brokerage (see "Getting Set Up To Trade Futures" entry), exams are required to serve as a commodity trading advisor (CTA), branch manager or futures commission merchant (FCM), for example.
After passing the Series 3 exam, one can register as a CTA at a registration cost of $100 per year. Once an individual produces a disclosure document and starts trading accounts as a CTA, that individual must be a National Futures Association "member CTA" which means an annual fee of $500, (plus the $100) for a total of $600 per year; or one can register with a 7-R as a CTA and with an 8-R and fingerprint cards as an AP to the CTA. Total cost $170. This gets the registrations active, then when someone is ready to begin trading for customers, all they need do is produce the disclosure document and become an NFA member by sending $500 for membership. Customers can open accounts through any FCM they choose. The FCM pays the CTA commissions on the trades done.
This exam is administered by the Financial Industry Regulatory Authority (FINRA) (previously the National Association of Securities Dealers (NASD). The National Futures Association (NFA) requires an individual to successfully complete the Series 3 in order to become qualified to sell commodities or futures contracts.
Individuals may use the Series 31 exam if (1) they are registered with FINRA as a General Securities Representative with their sponsor and (2) they are going to limit their futures activities of behalf of their sponsor to soliciting funds, securities or property for participation in a commodity pool, soliciting discretionary accounts to be managed by CTAs or supervising persons who perform these same limited activities.
Individuals may use the Series 32 if, within the two years prior to filing the application, they have been registered or licensed to solicit customer business in futures in a jurisdiction outside of the United States (currently UK and Canada only). In order to be eligible for this alternative exam, applicants must submit proof of such registration or license to NFA.
Referral of Securities' Clients Individuals are not required to take an examination if (1) they are registered with FINRA as a General Securities Representative with their sponsor and (2) they are going to limit their futures activities on behalf of their sponsor to referring clients to APs of the sponsor, which referrals are solely incidental to their business as a General Securities Representative, or supervising persons who perform these same limited activities.
Waivers for CPOs and CTAs Trading Primarily in Securities Under NFA Registration Rule 402, NFA may waive the examination requirements for certain individuals who are associated with CPOs that are required to register solely because they operate commodity pools principally engaged in securities transactions and/or who are associated with CTAs that are required to register solely because their securities advisory services include advice on the use of futures and options for risk management purposes. The individual or firm requesting the waiver must provide a written description of the facts that qualify the individual for a waiver.
NFA must receive evidence that individuals applying to be a branch office manager have passed the Series 30. However, NFA will not require evidence that they have passed the Series 30 if, since the date they last ceased acting as a branch office manager, there has not been a period of two consecutive years during which they have not been registered as an AP. Additionally, individuals whose sponsor is a registered broker-dealer may, in lieu of the Series 30, provide proof that they are qualified to act as a branch office manager or designated supervisor under the rules of the Financial Industry Regulatory Authority (FINRA).
|NFA Exams||Cost||Number of Questions||Material Covered||Time Alloted|
|Series 3/National Commodity Futures Examination||$95||120 True/False and Multiple Choice||Market knowledg and U.S. Regulations||2 Hours, 30 Minutes|
|Series 30/Branch Manager Exam||$60||50 True/False and Multiple Choice||Supervisory issues||1 Hour|
|Series 31/Futures Managed Funds Examination||$60||45 True/False and Multiple Choice||Managed Funds||1 Hour|
|Series 32/Limited Futures Examination/Regulation||$60||35 True/False and Multiple Choice||US Regulations||45 Minutes|
Certificate in Investment Performance Measurement Programs
The Chartered Financial Analyst (CFA) and Certificate in Investment Performance Measurement (CIPM) programs are offered by CFA Institute. The CFA designation is given to individuals who pass a series of three examinations: CFA Level I, CFA Level II and CFA Level III.