SR-FINRA-2023-004

The Financial Industry Regulatory Authority, FINRA, has published on its website a proposal to revise the „content outline and selection specifications for the research analyst exams (Series 86 and 87)“ which has been filed with the Securities and Exchange Commission (SEC) for approval and immediate effect. The proposal follows a recent joint review of the exam program by FINRA and a committee comprised of industry representatives.
To recall, FINRA Rule 1220 requires associated persons providing investment research and 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.
FINRA is now seeking to reduce the number of questions contained in the Series 86 exam to 85 (from previous 100) and to reclassify 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).
It may be noted at this point that the „data verification“ is a new function identified by FINRA and the committee and shows the significance of this task.
Furthermore, FINRA is seeking to reallocate 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 proposing 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.