What Is the Series 3 Exam?
The Series 3 exam, also known as the National Commodities Futures Examination, is a pivotal test administered by the Financial Industry Regulatory Authority (FINRA) for those looking to break into the commodities markets. Passing this exam qualifies candidates to register with the National Futures Association (NFA) and allows them to sell commodity futures contracts and options on commodity futures contracts. Unlike some other financial exams, such as the Series 7, individuals do not need to be sponsored by a firm to take the Series 3.
Key Points to Know
- The Series 3 is administered by FINRA on behalf of the NFA, a self-regulatory body for the U.S. derivatives market.
- Successfully passing the exam enables you to register with the NFA to sell commodity futures and options on these futures.
- There are several alternative exams for those interested in the commodities and futures markets, aside from the Series 3.
The Mechanics of the Series 3 Exam
The Series 3 exam is structured to cover critical subjects that commodities brokers need to master, including options, futures, hedging, margin requirements, as well as market and regulatory rules. The test consists of 120 multiple-choice questions divided into two parts, and candidates have two hours and 30 minutes to complete it. To pass, you’ll generally need to score around 70% on each part of the exam. The cost to take the exam is $130.
Even if you don’t pass the exam on your first attempt, you can retake it, although a waiting period might apply.
Why You Need to Pass the Series 3 Exam
Passing the Series 3 is typically a prerequisite for anyone wanting to sell commodity futures contracts and options. Whether you’re aiming to become a futures commission merchant (FCM), retail foreign exchange dealer (RFED), introducing broker (IB), commodity pool operator (CPO), commodity trading advisor (CTA), or associated person (AP), you’ll need to be proficiently certified, usually by passing the Series 3 exam.
If you’re applying for NFA membership, you’ll generally need to have passed the Series 3 exam within the past two years unless you meet certain exemptions.
How to Enroll
To register for the Series 3 or any other related exams, you can apply online via the FINRA website. Typically, FINRA will directly notify the NFA of your passed exam, but in some instances, you may need to provide proof yourself.
Alternatives to the Series 3 Exam
Depending on your specific focus within the commodities market, there are alternative exams you might pursue:
- Futures Managed Funds Examination (Series 31)
- Limited Futures Examination-Regulations (Series 32)
There are also other certifications like Series 30 (NFA Branch Manager Examination) and Series 34 (Retail Off-Exchange Forex Examination). The Series 3 is not a prerequisite for these exams, but obtaining various certifications can boost your credibility and career prospects.
Ready to take the next step in your financial career? Prepare for the Series 3 exam and unlock new opportunities in the exciting world of commodity futures and options!
For more details on the Series 3 and other industry exams, visit the NFA’s Proficiency Requirements page. To prepare for the exam, make sure to check FINRA’s On the Day of Your Qualification Exam resource.
Related Terms: Series 7, commodity pool operator, hedging, margin requirements.
