Overview of Series 31 Exam for Managed Futures Industry
In general persons who are selling futures related products are going to be required to have a Series 3 exam license. However, some broker-dealer representatives may be able to take the Series 31 exam instead of the Series 3 exam if their activities are limited to selling interests in commodity pools and other similar activities. This exam is required by the NFA for all individuals who want to sell futures funds, or those who want to receive trailing commissions on commodity pools or managed accounts guided by CTAs.
Series 31 Exam Basics
The following are some of the important items related to the exam:
- Prerequisites – person taking the exam must (1) be registered with FINRA as a General Securities Representative and (2) limit their futures activities on 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.
- Time Limit – 60 minutes
- Questions – 45 multiple choice questions.
- Passing grade – 70%
- Cost – $70
- Who – exam is required for those individuals who intend to sell managed futures.
- Exam topics –
A person can take the exam at most Pearson VUE or Prometric testing centers. You can register for the exam by submitting a Form U-10 through the IARD system. Please note that, effective September 15, 2010, FINRA requires individuals to use either their CRD number or FINRA ID number in order to schedule an exam and no longer accepts social security numbers. For more information, please see the NFA Guide to Sign up for Futures Exams.
Studying for the Series 31 Exam
Like the other FINRA and NFA exams, you should use a study guide and practice exams to prepare. The Series 31 does not have as many materials available as some of the more popular exams (Series 7, 65, 3, etc) but there are some materials which can be found through a simple Google search. [Note: we have not reviewed any Series 31 exam study guide so we cannot make any recommendations on any materials.] As with other exams, we recommend taking at least two to three practice exams prior to taking the actual test; persons not familiar with the managed futures industry might want to take more.
The actual exam
The exam is computer-based and will initially instruct you on how to properly answer and mark the following questions. Note that the beginning of the exam will most likely include the easiest questions, and then the questions will proceed to get harder as you reach the middle. Always attempt to make the most educated guess on questions that you do not understand.
The exam is fairly short so you should not need to take a break in the middle of the exam. You should remember that there is always have the option of marking the question for review so you should not spend an extended period of time on any one question. After you have completed the questions, you will
have the option of changing any of your answers. After completely answering everything, you will receive your score immediately.
If you don’t pass
A number of individuals who take the exam do not pass. If this is the case, you will need to wait 30 days before re-taking the exam. If you do not pass the exam the second time, you will need to wait another 6o days before taking the exam. If you do not pass either the third or fourth attempt, you will need to wait at least 180 days before taking the exam again. There is no limit on the number of times allowed for taking a test.
Cole-Frieman & Mallon LLP provides legal advice to the managed futures industry. Bart Mallon can be reached directly at 415-868-5345.