What Is the Series 28 Exam?

The Series 28 is a securities industry qualification exam administered by the Financial Industry Regulatory Authority (FINRA). Officially titled the Introducing Broker-Dealer Financial and Operations Principal Qualification Examination, the Series 28 is designed for individuals who intend to serve as financial and operations principals (FINOPs) at broker-dealer firms that operate on a limited basis. Specifically, it applies to firms classified as introducing broker-dealers that do not carry customer accounts or hold customer funds and securities.

A person who passes the Series 28 exam becomes qualified to oversee the financial and operational aspects of such a firm, ensuring that the firm remains in compliance with applicable financial responsibility rules under federal securities laws.

Purpose and Scope

The core purpose of the Series 28 qualification is to ensure that firms with limited business models have a competent individual responsible for supervising their financial and operational integrity. The exam certifies that the individual has the knowledge necessary to prepare and maintain the firm’s financial books and records, perform financial reporting, and ensure compliance with net capital and customer protection requirements under SEC Rule 15c3-1 and related regulations.

The Series 28 serves as an alternative to the more comprehensive Series 27, which qualifies individuals for the same role but in full-service broker-dealers that carry customer accounts and handle customer funds and securities. Because Series 28 is intended for firms with more limited operations, the exam’s content is narrower in scope, though it still covers essential regulatory and accounting knowledge.

Eligibility Requirements

Before taking the Series 28 exam, candidates must be associated with and sponsored by a FINRA-member firm. Sponsorship is a mandatory requirement, as the exam is not available to the general public or individuals unaffiliated with the securities industry.

In addition to sponsorship, candidates are required to pass the Securities Industry Essentials (SIE) exam if they have not already done so. The SIE is a co-requisite for most representative-level qualifications and provides a baseline understanding of the securities industry.

Exam Content and Structure

The Series 28 exam tests a candidate’s understanding of the rules, procedures, and accounting practices that govern limited broker-dealers. It is structured to assess practical knowledge across a variety of topics relevant to the role of a financial and operations principal.

The exam consists of 95 multiple-choice questions, with a time limit of two hours and 30 minutes. A score of 69% or higher is required to pass. The test covers the following major areas:

• Financial Reporting and Regulatory Filing Requirements: Understanding obligations related to the preparation of FOCUS (Financial and Operational Combined Uniform Single) reports, annual audits, and notices to regulators.
• Net Capital Requirements: Knowledge of capital adequacy rules specific to introducing broker-dealers, including the calculation of net capital and understanding when a firm must notify regulators about deficiencies.
• Customer Protection Rules: Limited coverage due to the firm’s business model, but still includes obligations under SEC Rule 15c3-3 where applicable.
• Recordkeeping Requirements: Familiarity with the types of books and records a firm must maintain, how long they must be kept, and the format in which they must be preserved.
• Anti-Money Laundering (AML) and Financial Responsibility: Basic compliance knowledge involving suspicious activity monitoring and regulatory safeguards.

Because Series 28 is tailored for a specific category of broker-dealer, the exam does not cover topics such as margin rules, order handling, or safekeeping of customer securities, which are more relevant for Series 27-qualified principals.

Role and Responsibilities of a Series 28 FINOP

Once registered, a Series 28 FINOP is responsible for ensuring the financial soundness and regulatory compliance of their firm. They typically oversee the firm’s accounting records, submit required regulatory reports, and act as a liaison with regulators during routine examinations or in response to financial red flags.

A FINOP’s responsibilities also include interpreting regulatory guidance, managing audits, preparing internal financial statements, and working with third-party accountants or compliance consultants. Although a FINOP may not have direct responsibility for sales or trading functions, they play a vital role in the overall compliance infrastructure of the firm.

Comparison to Series 27

The Series 28 is often compared to the Series 27 exam because both qualify an individual to act as a financial and operations principal. The main distinction lies in the firm’s business model:

• Series 27 is required for FINOPs at clearing firms or carrying broker-dealers that hold customer funds or securities.
• Series 28 is sufficient for introducing firms that do not handle customer funds or securities directly.

This distinction makes the Series 28 exam less comprehensive but more accessible for firms with limited activities. Choosing between the two depends entirely on the nature of the broker-dealer's operations.

Regulatory Oversight and Continuing Obligations

FINRA and the Securities and Exchange Commission (SEC) provide ongoing oversight for broker-dealer operations. Registered FINOPs must ensure that all filings are submitted accurately and on time, and that internal systems comply with changing regulations. Failure to maintain compliance can result in fines, disciplinary actions, or revocation of registration.

Additionally, FINOPs may be required to complete Continuing Education (CE) requirements to maintain their qualification, including participation in the Regulatory Element and Firm Element programs, depending on their role and the firm’s policies.

The Bottom Line

The Series 28 qualification is essential for individuals overseeing the financial operations of introducing broker-dealers. It provides the regulatory foundation necessary for maintaining accurate records, meeting capital requirements, and staying in compliance with financial reporting obligations. While it is narrower in scope than the Series 27, it remains a critical certification for those managing the operational integrity of limited-purpose brokerage firms.