Discussion about Forex Registration and the Series 34 Exam


Creating Series 34 Exam Prep Materials

One central issue in the investment management industry is increases in regulation of previously unregulated or lightly regulated activities.  The major area which will see direct regulation within the next 12 months is the retail off-exchange foreign currency industry.  As we have discussed, forex managers and those parties which solicit retail forex investors are is expected to have to register with the NFA as forex CPOs, forex CTAs or forex introducing brokers.  As part of this process, individuals subject to registration are going to need to pass the Series 34 exam.  This article will discuss the exam and the new exam prep materials I have been creating to help managers pass the exam.

Overview of the Series 34 Exam

The Series 34 exam is a brand new test created by the NFA at the very end of last year. I have talked with the National Futures Association (which is the self regulatory organization in charge of the forex registration process) and they have told me that individuals can now take the Series 34 exam.  To take this exam individuals are going to need to submit a Form U-10, pay the $70 testing fee and sign up with either Pearson Vue or Prometric to actually take the exam.  The exam is 60 minutes long, has 40 questions and requires 70% correct answers for successful completion.

Series 34 Exam Preparation Materials

There are very few Series 34 materials out there for managers to study from.  I have talked with many different groups and they are planning on potentially releasing a Series 34 exam study guide, but these groups will be waiting until they are able to judge the demand for such a product.  Of course we cannot know the demand for the product until the CFTC proposes its forex registration rules, but it is a safe bet that many forex managers will need to take the exam.  Accordingly, I have started creating a free series 34 exam study guide for the general public.

The free series 34 exam study guide will provide an explanation of all of the major concepts that the NFA has stated will be covered in the exam.  I have provided in depth explanations on the concepts through my own research through many available online resources.  I believe that these materials will be strong, especially with regard to the regulatory requirements for forex managers – I have been reporting on these requirements now for over 6 months and have been able to cull together great resources.

In addition to the free guide, I will also have premium materials available for purchase.  These materials will include an outline, notecards, and practice questions.

  • The series 34 outline will be similar to an outline that you might see prepared for a law school exam – I have taken numerous exams (including many FINRA sponsored exams – Series 3, Series 7, Series 24, Series 63, Series 65) and have found that an outline is a great way to make sure all of the basic concepts are ingrained prior to taking the exam.
  • The series 34 notecards will be an exact replica of the notecards which I will use to study.  You can either print out the notecards and cut them out or you can copy the information onto individual notecards yourself.  I would recommend you write out the information onto individual notecards – in this way you enforce the learning process.  Probably my favorite way of studying is through notecards.  I can take them with me anywhere I am going and then study them when I am in line at a store, on a bus, during a TV commercial, etc.
  • The series 34 practice questions will be similar in style to the questions which you will expect to see on the exam.  I am going to write practice exam questions before I take the exam based on what material I think will be covered in the exam.  I am going to try to write toward areas of expected weakness so I anticipate the questions will be more difficult than those to be seen on the exam.  Additionally, I plan to go back and add more questions after I take the exam to best reflect the nature and difficulty of the questions on the exam.

Information on How to Study for the Series 34 Exam

The ultimate goal of the above exam prep materials is to provide forex managers with the tools they need in order to pass the test on the first try.  It is a waste of time and money to study and then not pass the test on the first time because of lack of preparation or study materials.  If the manager does not pass the exam on the first try, they will need to wait 30 days before they can take it again; if a manager does not pass the exam on the second try, they will need to wait 60 days before they can take it again.

As I have coached managers through the test taking process numerous times before I understand what is needed to pass on the first time – it is simply not enough to only read an exam prep guide.  You must read an exam prep guide and proactively study the concepts which will be tested.  Very smart people have failed the regulatory exams because of not properly studying.   You will need to over-study.

A common joke in the industry is that the perfect score is 70% because it means that you didn’t study too much to pass.  If someone else is paying for you to take the exam, and if you are still considered “on the clock” if you take time off of work to go take the exam, then this thinking may be fine (if you don’t mind taking tests) – however, for busy forex managers your time is too valuable to waste by not passing on the first try.  You should go into the test confident that you will pass and not hoping that you studied “just enough” to pass.

Series 3 Exam – A Pre-Requisite

While anyone can take the Series 34 exam, forex managers will likely need to have passed the Series 3 in addition to the Series 34 exam.  [HFLB Note: the CFTC has not promulgated rules on this issue so this is not a for sure requirement yet.]  I have taken the Series 3 exam and passed and provided more information here (general guidelines on how to study for a FINRA exam can be found here) – please review these articles in addition to the other resources linked on this page.

Timing of Materials Release

I should be able to release the materials later on this week.  I am currently planning to take the exam sometime this week.  I will update this article once the materials have been posted on our other websites.  In the meantime, please feel free to contact us with any questions you might have.

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