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Printer-Friendly Last Updated: 4/22/03 Qualifications Frequently Asked Questions - Research Analysts

The following are frequently asked questions (FAQ) about FINRA registration and qualification requirements. Click on the links below to view all sections of the FAQ. To submit questions that do not appear in this document, please send us an email.

Membership | Examinations | Registration | Foreign Associates
Branch Office/Office of Supervisory Jurisdiction | Research Analysts

RA1 Who needs to take the Research Analyst Examination (Series 86/87)

A. Any associated person of a member who is primarily responsible for the preparation of the substance of a research report on equity securities or whose name appears on a research report on equity securities. For the purposes of determining who needs to register as a research analyst, the term "research report" has the same meaning as it does in Rule 2711(a)(8): "a written or electronic communication that includes an analysis of equity securities of individual companies or industries, and that provides information reasonably sufficient upon which to base an investment decision." Members should refer to Notices to Members 02-39 and 04-18 for interpretation of the definition of a "research report" under 2711(a)(8).

[NASD Rule 1050 - Registration of Research Analysts and Rule 2711 - Research Analysts and Research Reports]

RA2. What is covered on the Series 86 and 87?

A. The Research Analyst exam consists of two parts. Part I - Analysis (Series 86) consists of 100 multiple-choice questions that primarily test fundamental analysis and valuation of equity securities. Part II - Regulatory Administration and Best Practices (Series 87) consists of 50 multiple-choice questions that cover relevant federal and industry rules and regulations. Candidates are allowed 240 minutes to complete Part I and 90 minutes to complete Part II. Candidates may take Parts I and II in any order and may schedule the examinations on the same or different days.

RA3. How is the Research Analyst Examination graded?

A. Since multiple forms of the examination will be administered, the passing score will fluctuate moderately from examination to examination.  Candidates will be given an informational breakdown of their performance on each of the sections, along with their overall score and grade at the completion of exam session.

RA4. Can a research analyst who has passed CFA Level I and II obtain a exemption from Series 86?

A. A research analyst who has passed both Level I and Level II of the Chartered Financial Analyst (CFA) Examination that is administered by the CFA Institute may request an exemption from Part I (Series 86), the Analysis section of the Research Analyst Qualification Examination. To be eligible for the exemption, an applicant must have passed Levels I and II of the CFA examination and must either (1) have functioned continuously as a research analyst since having passed Level II of the CFA examination or (2) have passed Level II of the CFA examination within two years of application for registration as a research analyst.

RA5. What evidence will be required from a candidate who has passed the CFA Level I and II examinations?

A. No evidence will be required. A member must submit electronically to FINRA a request for the CFA exemption, and FINRA will confirm the candidate's eligibility with AIMR.

RA6. Can a request for an exemption (waiver) of the Series 87 be granted for someone who has Series 7, CFA Levels I, II, & III, and the NYSE Series 16?

A. Waivers of the Series 87 will NOT be granted under any circumstances.

RA7. What registration and qualification requirements must supervisors of registered research analysts possess?

A. All registered FINRA research analysts must be supervised by a research principal who will be required, in addition to passing the General Securities Principal (Series 24), to also pass either Part II of the Research Analyst Exam-Regulation (Series 87) or the NYSE Supervisory Analyst Examination (Series 16).

RA8. We have many analysts in our BD/IA firm who both educationally and through industry experience qualify as investment analysts and have passed Series 6, 7, 63, and 65. Would they be "grandfathered" as research analysts?

A. The research analyst registration requirement does not include a "grandfather" provision.  All associated persons who meet the definition of a research analyst, new and incumbent, must satisfy the qualification requirements of NASD Rule 1050.

RA9. Are "sell-side" equity analysts required to register as research analysts and pass the Series 86/87?

A. Yes. The registration and qualification requirements of Rule 1050 do not distinguish between "sell-side" and "buy-side" analysts. Any person who prepares written or electronic communications that includes an analysis of equity securities and sufficient information upon which to base an investment decision would be required to register as a research analyst.

RA10. Would individuals who prepare research for a member firm as consultants be subject to the requirements of NASD Rule 1050?

A. If the consultant is an "associated person" under FINRA rules and his or her activities fall under the definition of "research analyst" pursuant to Rule 1050, the consultant would have to register as a research analyst.

RA11. Does this requirement apply to everyone who works in equity research or just those who write a research report that will be seen by the public?

A. Rule 1050 applies to associated persons who prepare publicly disseminated research reports. Associated persons who prepare reports for use only by a member's sales force, money managers, or other employees of the firm, and who do not have reason to believe that the reports will be redistributed publicly, would not be subject to this rule.

RA12. Is a research analyst who is employed by a foreign broker/dealer affiliate of a FINRA member required to register pursuant to Rule 1050 if the member uses that analyst's research reports or distributes in the United States in accordance with SEC Rule 15a-6?

A. A "research analyst" employed by a non-member affiliate of a FINRA member is not required to register as a research analyst pursuant to Rule 1050 unless the research analyst is an "associated person" of the FINRA member as that term is defined in the FINRA By-Laws.