Regulatory Notice 23-05

The Financial Industry Regulatory Authority, FINRA, has published a new Regulatory Notice (23-05) in which it specifies the final changes to its „Research Analyst (Series 86/87) Exam Program“. These changes will apply from May 15, 2023 and were previously sent to the Securities and Exchange Commission (SEC) for final approval.
To recall, FINRA Rule 1220 requires associated persons providing investment research and those who are primarily „responsible for the preparation of the substance of an equity research report“ or whose names appear on an equity research report, to register with FINRA as a „research analyst“ which in turn requires the passing of the Securities Industry Essentials exam (SIE exam) and the Series 86 and 87 exams unless a waiver has been granted by FINRA.
Following the approval of the SEC, FINRA is now reducing the number of questions contained in the Series 86 exam to 85 (from previous 100) and is reclassifying the questions in accordance with the functions performed by a research analyst, namely:
– Function 1: Information and Data Collection (18 questions);
– Function 2: Data Verification and Analysis (28 questions); and
– Function 3: Valuation and Forecasting (39 questions).
Furthermore, FINRA is reallocating the questions in the Series 87 exam as follows:
– Function 4: Preparation of Research Reports (36 questions); and
– Function 5: Dissemination and Marketing of Information (14 questions).
Finally, FINRA is making corresponding changes in the „content outline“ to reference all applicable rules and regulations to those functions and to revise its question bank and question selection criteria accordingly.