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95-14 Revised General Securities Registered Representative Examination (Series 7);

Effective Date: May 1, 1995


Legal & Compliance

In early 1993, six self-regulatory organizations (the American Stock Exchange, the Chicago Board Options Exchange, the Municipal Securities Rulemaking Board, the National Association of Securities Dealers, Inc., the New York Stock Exchange, and the Philadelphia Stock Exchange) formed an industry-wide committee to review the content outline and question selection specifications for the General Securities Registered Representative Examination (Series 7). The 10 industry members of the committee included branch/sales managers, compliance officers, training personnel, and registered representatives (RRs).

The committee reviewed the critical job functions RRs perform and the specific tasks within those functions. To further verify the job relevance of the examination, a job-analysis survey was conducted with a sample of entry-level RRs from a range of broker/dealers. In view of the survey results, the committee reviewed the number of items for each topic on the examination and the rules to be covered in the examination, and recommended revising the examination.

The revised Series 7 remains a single-grade, 250-question test. The revised examination covers all financial products areas covered in the existing examination, and the overall emphasis on investment products generally remains the same. Topical coverage of direct participation programs, particularly relative to taxation, has been reduced. Questions related to the basis book and interpolation, supply-side economics, and calculating margin on options have been deleted. Questions will be added on Sallie Mae securities and exchange-traded, yield-based options. The revised examination will include questions on collateralized mortgage obligations (CMOs), long-term equity options, and capped index options. The number of questions on CMOs has been increased. The revised test increases the emphasis on issues related to determining and monitoring suitability.

The self-regulatory organizations will join a committee to periodically determine any adjustments to the examination outline and specifications that may be required. The committee will represent a broad range of expertise and broker/dealer organizations. This committee will address any new information that RRs need to know, information currently specified in the examination that should be deleted, and adjustments in emphasis on various topics that need to be made.

Administration of the revised examination will start in on May 1, 1995, at the NASD PROCTOR® Certification Testing Centers. Credit card orders for the revised test, at $8.10 per copy (add 20 percent for first-class shipping), may be placed with the NASD Media SourceSM at (301) 590-6142. Orders by check should be sent to the NASD, Book Order Department, P.O. Box 9403, Gaithersburg, MD 20898-9403.

Questions on the general content of the revised test should be directed to David Uthe, NASD Qualifications and Examinations Department, at (301) 590-6695.

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