Series 31

What Is the Series 31?

The Series 31 is an exam and securities license qualifying the holder for sell managed futures funds or direct those activities. It additionally ensures individuals who need to receive trailing commissions on commodity limited partnerships, managed accounts, or commodity pools as exhorted by Commodity Trading Advisors (CTA).

The Series 31 Exam is a National Futures Association (NFA) exam administered by the Financial Industry Regulatory Authority (FINRA). Otherwise called the Futures Managed Funds Examination, it covers subjects like rules, regulations, and responsibilities with respect to the futures industry.

Series 31 Structure

A managed futures account is a type of alternative investment vehicle. It is comparative in structure to a mutual fund, then again, actually it centers around futures contracts and other derivative products.

In the United States, suppliers of managed futures accounts are regulated by the Commodity Futures Trading Commission (CFTC) as well as the National Futures Association (NFA).

The Series 31 Exam comprises of 45 different decision questions, which up-and-comers have an hour to complete. A passing score is 70%. Applicants must be registered with FINRA to step through the examination. The exam's cost is $85.

Series 31 Requirements

An individual might use a Series 31 in the event that they meet the accompanying criteria:

• They are registered with FINRA as a General Securities Representative with a FINRA member firm;
• The FINRA member firm is additionally a NFA FCM (futures commission merchant) or IB (introducing broker) Member firm or an applicant for NFA FCM or IB membership and is supporting the individual for AP registration; and
• The individual will limit futures activities for that NFA/FINRA supporting firm to requesting funds, securities, or property for participation in a commodity pool, requesting discretionary accounts to be managed by CTAs, or regulating people who perform these equivalent limited activities.

Series 31 Outline

The Series 31 covers these major subject areas:

• General Market Knowledge: This incorporates definitions and significance of edges, futures and forward contracts, ruler limits, open interest, offsetting contracts, "stamping to-market," settlement, spread trades, basis, hedging, yield curve, cost of carry, leverage, and price volatility.
• General Regulation: Arbitration claims and awards, NFA disciplinary cycle, NFA Compliance Rule 2-9 (supervision of employees), "Qualified Eligible Participant," registration requirements, trading on foreign markets, books, and records to be kept up with.
• CPO/CTA Regulations: Reports to customers, exemptions from registration, records to be kept up with, limited partnerships, accepting funds from customers.
• CPO/CTA Disclosure Documents: Management and incentive fees, performance records, irreconcilable circumstances, how long a CPO (commodity pool operator) or CTA can utilize a disclosure document, pool units purchased by chiefs, disclosure statements, business foundations of directors, NFA survey of document before use and disclosure of disciplinary action.
• Realize Your Customer Rule: Client data required and risk disclosures.
• Disclosure by CPOs and CTAs Required for Upfront Fees: Disclosure of upfront fees and expenses and the effect of upfront fees and organizational expenses on net performance.
• Promotional Material (Compliance Rule 2-29): Definition of promotional material, normalized sales introductions, utilization of a third-party counseling or advertising firm, reprints of articles from industry distributions, recordkeeping of promotional material, past performance, speculative trading results, written procedures for promotional material and supervisory survey of promotional material.

For more detail, see the NFA's Series 31 Study Outline.

Features

• Managed futures accounts are investment vehicles that hold positions in derivatives, like commodity futures, stock options, and interest rate swaps.
• The Series 31 is a financial industry licensing exam that permits one to sell or oversee managed futures funds or commodity pools.
• The exam is administered by the National Futures Association (NFA) related to FINRA.