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Qualification Exam Waivers and Exemptions

FINRA may grant waivers, in exceptional cases, or exemptions for qualification exams, pursuant to FINRA Rule 1210.3, FINRA Rule 1220 and Rule 9600 Series, and accept other standards as evidence of an applicant’s qualification for registration, such as experience in the securities industry,  educational achievement, or qualification by a specified foreign entity. FINRA may also consider an applicant’s experience in a field ancillary to the investment banking or securities business as grounds to waive an exam. FINRA exercises its waiver authority where good cause is shown by the sponsoring firm requesting a waiver for one of its associated persons.

Starting October 1, 2018, in addition to the current qualification exam waiver categories, firms will be able to request a waiver or an exemption for the Securities Industry Essentials (SIE) exam and the appropriate top-off exams. Firms are permitted to request an SIE-only waiver on behalf of an individual only in conjunction with a representative-level exam request. Waivers can be requested for one or a combination of the following exams: SIE, representative-level and principal-level.

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Types of Exam Waiver Requests


FINRA reviews each waiver request on its individual merits and considers all relevant facts presented by the sponsoring firm. Moreover, in reviewing each request, FINRA considers the nature of an applicant’s disciplinary, regulatory and criminal history, including arbitration awards or settlements. Below are some of the most common types of waiver requests, which can assist you in recognizing situations in which a basis may exist for requesting a waiver.

  1. Requests Based on Registration Filing Errors
    These requests involve individuals who are working in good faith as representatives or principals in firms, but whose registrations, for reasons related to the filing of the appropriate application forms, are not reflected in CRD®. FINRA may waive the exam for such an individual provided the firm documents the filing error and confirms the individual has, in good faith, engaged in securities business.
  2. Requests Based on Securities Industry and Related Investment Field Experience
    These requests take into account an individual’s experience in the securities industry and in related investment fields. These include, but are not limited to, investment banking, securities trading on behalf of a financial institution, securities research, portfolio management, investment advisory services or securities activities in a foreign broker-dealer. FINRA considers such factors as:
    • the length and quality of the applicant's securities industry experience or professional experience in investment-related fields;
    • the specific registration(s) the applicant requests and the type of business to be conducted in relation to the applicant's experience;
    • the applicant's previous registration history, if any;
    • the nature of the applicant’s disciplinary, regulatory and criminal history, including any such matters that are disclosed on the applicant's CRD record and, specifically, any arbitration awards or settlements; and
    • other exams taken by the applicant, such as those for certified financial planner or chartered financial analyst, that may be acceptable substitutes in conjunction with experience and other factors above, for the normal securities industry qualification exam.
  3. Requests Based on Educational Achievement
    FINRA will consider waiver requests from applicants who terminate their registrations, enroll in a master’s or law program that substantially emphasizes finance and investments, and then promptly return to a firm after completing their studies. Applicants must furnish a copy of their program transcript with the waiver request.
  4. Requests Based on Regulatory Experience
    Applicants previously registered with a firm or whose most recent employment has been with a securities regulatory agency may seek a waiver to have their registration reinstated. Those with no prior securities registration must have at least five years of regulatory experience for a waiver request to be considered.

Eligibility for Exemption Requests


Securities Industry Essentials (SIE) Exam Exemption

Pursuant to FINRA Rule 1220.01, individuals who are in good standing as representatives with the Financial Conduct Authority (FCA) in the United Kingdom or with a Canadian stock exchange or securities regulator are exempt from the requirement to pass the Securities Industry Essentials (SIE) exam. The SIE exemption is based on the following criteria:

  1. For Financial Conduct Authority (FCA) – An applicant will be granted an exemption if the applicant is in good standing with the FCA and meets the following requirements:
    1. Holds or has held an active registration with the FCA within the past two years; and
    2. Has passed one or a combination of the Acceptable Chartered Institute for Securities & Investment (CISI) exam(s) .
    After verifying that the individuals have the requisite certification(s), the applicants must complete the CISI Verification Form  and send it to CISI at [email protected] Upon receipt of the form, CISI will send FINRA the applicant's exam information. Failure to complete the CISI verification process will delay the exemption process and may result in a denial.
  2. For Investment Industry Regulatory Organization of Canada (IIROC) – An applicant will be granted an exemption if the applicant is in good standing with IIROC and meets the following requirements:
    1. Holds or has held an active registration with IIROC within the past two years and
    2. Has satisfied the following training and competence requirements:
      1. Passed the Canadian Securities Course (CSC);
      2. Completed one of the following exams/course:
        1. Registered Representative Exam (RRX)
        2. Partners, Directors Officers Exam (PDO)
        3. Conduct and Practices Handbook Course (CPH)
      3. Completed one of the following courses:
        1. Conduct Options Course (COC),
        2. Options Licensing Course (OLC),
        3. Derivatives Fundamental and Options Licensing Course (DFOL).
    Upon receipt of the waiver request, FINRA will verify the applicant’s exam information with IIROC.

Series 16 Exemption (Part II of Supervisory Analyst Exam)

Pursuant to FINRA Rule 1220(a)(14), FINRA may grant an exemption from the securities analysis portion (Part II) of the Supervisory Analyst Qualification Exam (Series 16) upon verification that the applicant has passed Level I of the Chartered Financial Analyst (CFA) exam. The firm must provide the applicant’s CFA Institute ID number for verification.

Series 86 Exemption

Pursuant to FINRA Rule 1220(b)(6)(B), FINRA may grant an exemption from the analytical portion of the Research Analyst Qualification Exam (Series 86) upon verification that the applicant has passed:

  1. Level I and II of the Chartered Financial Analyst (CFA) exam; or
  2. if the applicant functions as a research analyst who prepares only technical research reports as defined in paragraph (b)(6) of this Rule, Levels I and II of the Chartered Market Technician (CMT) Examination; and
  3. has either functioned as a research analyst continuously since having passed the Level II CFA or CMT Examination or applied for registration as a research analyst within two years of having passed the Level II CFA or CMT Examination.

The firm must provide the applicant’s CFA Institute ID number or CMT ID number for verification.

How to Request an Exam Waiver or Exemption


Requests for SIE and qualification exam waivers and exemptions must be submitted by a firm on behalf of the applicant. The firm must submit the request via the Firm Gateway at https://firms.finra.org/examwaivers.

The firm should ensure that it requests the appropriate waiver(s) and/or exemption(s). Failure to request the appropriate exam waiver(s) may result in a delay in the review process.

To verify that waiver(s) and/or exemption(s) are requested for the appropriate exam(s), the firm should confirm that the waiver request(s) match the open exam window(s) in the applicant’s CRD® record.

Requests by individuals or requests via email or postal mail will not be considered.

Entitlement

Each firm's primary CRD account administrator has waiver submission entitlement privileges. Account administrators who do not have entitlement privileges can request them through the firm's Super Account Administrator (SAA).

Process for Submitting SIE and Qualification Exam Waiver and Exemption Requests

For each SIE and qualification exam waiver and exemption request, a firm must submit a Uniform Application for Securities Industry Registration or Transfer (Form U4) electronically via CRD at least one business day prior to submitting such requests via Firm Gateway. The Form U4 must include an open exam window for each qualification exam waiver or exemption request submitted.

The firm must provide the information requested on the form, which, in addition to the applicant’s registration and the firm contact information, includes the reason(s) for the waiver. The firm has the ability to attach documentation to support the reason(s) for the waiver or exemption request.

FINRA may send an email request for additional information. The firm must promptly reply to the email with the additional information requested. If a response to request(s) for additional information is not received within 21 calendar days, FINRA will make a decision on the waiver request based on the originally submitted information.

After You Apply for an Exam Waiver or Exemption

Waiver and exemption requests are decided as follows:

  1. conditional grant,
  2. unconditional grant or
  3. deny.

Most of the waivers and exemptions that are granted are conditional, and applicants must fulfil the condition within 90 calendar days of the waiver decision letter date. Unconditional grants represent only a small fraction of the waiver and exemption decisions. Principal exams are rarely waived.

SIE waivers and exemptions are conditional upon the applicant passing an appropriate qualification exam. An applicant will have a maximum of two attempts (within the 90 days) to pass the qualification exam. After two failed attempts, the conditional waiver for the SIE will no longer be available, and the applicant will have to pass both the SIE and the qualification exams to obtain the registrations.

Qualification exam waivers are conditional upon the applicant successfully completing the appropriate Regulatory Element Continuing Education session pursuant to FINRA Rule 1240. An applicant who fails to fulfill the condition within the 90 days must pass the applicable exam(s) to obtain the registration(s). Qualification exam exemptions are unconditionally granted provided the applicant meets the criteria for the exemption.

Notification of Decision

FINRA will send email decision letters for waiver and exemption requests to the email address provided by the firm on the waiver request form. The applicant must satisfy any conditions attached to a waiver within 90 calendar days, before the applicant's registration will become effective.

State Regulatory Agencies

In addition to FINRA requirements, most applicants are subject to state licensing and qualification requirements. While FINRA can grant qualification exam waivers for its own requirements, it is not permitted to make waiver decisions for other regulatory agencies. Thus, sponsoring firms must pursue waivers from state licensing and qualification requirements, including NASAA's Series 63, Series 65 and Series 66 exams, in each state where the applicant will be licensed.

Appealing Waiver Decisions

A firm is permitted to appeal an exam waiver decision on behalf of the applicant within 15 calendar days after receipt of the decision. Any such appeal should be submitted in the form described in FINRA Rule 9630 via U.S. Postal Service or courier service to:

Office of the General Counsel
FINRA Regulatory Practice and Policy
Exam Waiver Appeals
1735 K Street, NW
Washington, DC 20006
Attention: Lisa Toms

Questions

Individuals who have questions regarding the waiver and exemption process should contact the registration and licensing group in their firm.

Firms that have questions regarding the waiver process should contact the FINRA Call Center at (301) 590-6500.