What is the Series 3 Exam?
The Series 3 exam, administered by FINRA (Financial Industry Regulatory Authority) also called the National Commodities Futures Exam (NCFE) is required by the National Futures Association (NFA) for people who intend to become members.
All companies or people intending to work as futures professionals must register under the Commodity Exchange Act , the purpose of which is to screen and ensure the fitness of each applicant to engage as a futures trader.
Series 3 Quick Facts
|Exam Name||Series 3|
|Sponsorship Required?||Yes - through membership of the NFA as member or associate in order to conduct futures-related business|
|Exam Type||Combination of True / False and Multiple Choice|
|Number of Questions||120 in two parts.|
|Exam Duration||150 minutes|
|Pass Mark||70% (84 correct answers)|
|Administered by||FINRA Series 3 Exam|
Some applicants may be entitled to an exemption. Click the relevant link to go to the NFA website to see if you gain exemption.
Series 3 Exam Questions
The FINRA Series 3 exam is composed of 120 questions, split into two parts.
There are 85 questions based on market knowledge and 35 questions testing your knowledge of the regulations.
There are also 5 pre-test questions that are mixed in (taking the total to 125 questions to answer on the day) but these 5 do not count to your score. These questions are being trailed before use in an actual examination.
Futures Trading Theory and Basic Functions Terminology
The Futures Contract
The Structure of Futures Markets
General Futures Terminology
General Options Terminology
Futures Margins, Option Premiums, Price Limits, Futures Settlements, Delivery, Exercise and Assignment
Offsetting Contracts, Settlements, Delivery
Options Exercise, Assignment, Settlement
TYPES OF ORDERS, CUSTOMER ACCOUNTS, PRICE ANALYSIS
Basic Characteristics and Uses
Technical Price Analysis
Fundamental Price Analysis
Interest Rate Analysis
BASIC HEDGING, BASIS CALCULATIONS, HEDGING FUTURES
Short Hedging and Long Hedging
Common Types of Spreads
SPECULATING IN FUTURES
Profit/loss calculations for speculative trades (including spreads)
OPTION HEDGING, SPECULATING, SPREADING
Option Hedge Strategies/Calculations
Option Speculative Strategies/Calculations
Option Spread Strategies/Calculations
Series 3 Exam – Part 2
NFA Disciplinary Procedures
CFTC Commodity Exchange Act Enforcement
A good source of further breakdown of information as to which questions will be covered can be found here. There are also a selection of Series 3 exam practice questions and sample questions.
Recommended NCFE Series 3 Exam Study Guide: