What Is the Series 24 Exam?

The Series 24, officially known as the General Securities Principal Qualification Examination, is a regulatory licensing exam administered by FINRA (Financial Industry Regulatory Authority). Individuals who pass the exam and meet the necessary registration requirements are qualified to supervise or manage investment banking or securities business activities within a broker-dealer firm. The license grants authority to oversee registered representatives and other securities professionals, with a focus on ensuring compliance, regulatory adherence, and the proper handling of customer transactions.

This qualification is essential for those taking on supervisory roles within the securities industry. Unlike exams such as the Series 7, which authorizes the sale of specific financial products, the Series 24 is centered on managerial responsibilities rather than direct client-facing sales.

Purpose and Scope of the Series 24 License

The primary purpose of the Series 24 license is to ensure that those in supervisory positions within a broker-dealer firm have a thorough understanding of the rules, responsibilities, and procedures necessary to oversee securities business activities. Holding a Series 24 license allows an individual to manage or supervise activities such as:

• Underwriting of securities
• Trading of corporate, municipal, and government securities
• Market making
• Advertising and sales literature approval
• Compliance with FINRA and SEC regulations
• Internal supervisory controls and procedures

However, it does not permit individuals to supervise certain specialized areas unless they have additional licenses. For instance, supervising options trading would require a Series 4 license, and supervising municipal securities would require the Series 53.

The Series 24 license is often held by branch managers, compliance officers, and other firm leaders who are responsible for ensuring that operations are conducted in accordance with regulatory standards.

Exam Content and Structure

The Series 24 exam is developed by FINRA and designed to assess an individual's knowledge and ability to perform supervisory tasks. The test is composed of 150 scored multiple-choice questions, with an additional 10 unscored pretest questions. Candidates have 3 hours and 45 minutes to complete the exam. A passing score is 70%.

The content of the exam is divided into five main functions:

1. Supervision of Registration of the Broker-Dealer and Personnel Management
   Covers topics related to hiring, registration of representatives, ongoing education, and termination processes.
2. Supervision of General Broker-Dealer Activities
   Focuses on the day-to-day operations, such as maintaining books and records, financial responsibility rules, and client communication.
3. Supervision of Retail and Institutional Customer-Related Activities
   Includes oversight of customer accounts, order handling, and the review of correspondence and account records.
4. Supervision of Trading and Market-Making Activities
   Addresses the rules governing trading practices, reporting requirements, and handling of quotes and orders.
5. Supervision of Investment Banking Activities
   Involves supervision of new issues, syndicate practices, and due diligence for underwriting.

Each section is weighted differently, with an emphasis on compliance and operational oversight.

Prerequisites and Registration

To sit for the Series 24 exam, candidates must first be registered with a FINRA-member firm and hold an appropriate prerequisite license, most commonly the Series 7 (General Securities Representative license). Without this foundational license, a candidate is not eligible to register for the Series 24.

Once the candidate is sponsored by a firm and registered via the Form U4, they may schedule the exam through Prometric, a test administration service. The exam can be taken at a testing center or online via remote proctoring.

After passing the Series 24, the individual must be registered with FINRA as a General Securities Principal. This registration must be maintained through continuing education and compliance with firm-specific requirements.

Career Implications and Use

The Series 24 license is a requirement for those who plan to take on supervisory or managerial roles in a broker-dealer environment. Common roles that require this license include:

• Branch Manager
• Compliance Supervisor
• Operations Manager
• Trading Desk Supervisor
• Investment Banking Principal

Because of its broad supervisory scope, the Series 24 can also open the door to more senior compliance and regulatory positions. It’s particularly valuable for professionals aiming to lead departments or divisions within a firm or to assume responsibility for policies and procedures at the organizational level.

While the license allows for supervision across many functions, it does not authorize the holder to directly engage in activities that require other licenses unless those licenses are also held. This reinforces the regulatory principle that supervision must be conducted by individuals with appropriate subject-matter expertise.

Regulatory Importance

FINRA mandates the Series 24 qualification to ensure that supervisors possess the knowledge and judgment necessary to uphold industry rules and protect investors. Supervisory failures can result in significant compliance violations, and the presence of licensed principals helps reduce risk across firms and the markets.

The Series 24 also plays an important role in maintaining the integrity of financial markets by equipping supervisors to prevent and identify unethical practices, conflicts of interest, and violations of securities laws.

Because of the scope and responsibility that come with this license, regulators expect that Series 24 holders will take an active role in fostering a culture of compliance and accountability within their firms.

The Bottom Line

The Series 24 license is a foundational credential for those in supervisory roles within broker-dealer firms. It authorizes individuals to oversee a broad range of securities business activities and personnel, with an emphasis on compliance, operations, and customer protection. Passing the exam demonstrates a candidate’s readiness to manage complex regulatory responsibilities and contribute to a firm’s ethical and compliant operations.