The Ultimate SIE Exam Guide

Exam Guides
Written By Brandon Rith

FINRA's Securities Industry Essentials (SIE) Exam is an entry-level licensing exam required for registration as a professional in the securities industry. Passing this exam is a foundational requirement for many finance-related professions, including:

  • Financial advisers

  • Stockbrokers

  • Investment bankers

  • Research analysts

  • Traders

  • Mutual fund salespersons

  • Operations and compliance professionals

Wait, what is FINRA? The Financial Industry Regulatory Authority (FINRA) is the primary self-regulatory organization (SRO) of the securities industry. While not a governmental authority, FINRA has been granted regulatory power and is self-funded by the securities industry. Think of FINRA like private security hired by a shopping mall. It does not have the power to press charges or jail bad actors, but it acts as the ultimate "gatekeeper." Through its registration process, it decides who can and cannot operate professionally in the industry, like a private security guard decides who can and cannot enter a shopping mall.

What to Expect on the Exam

The SIE Exam covers basic securities and trading markets knowledge. However, while it only covers the "basics," many candidates face challenges while preparing. The securities industry is massive and complex, meaning the exam can draw from thousands of potential test topics. Because of this, virtually every SIE Exam is unique, and two different candidates can have noticeably different testing experiences.

Here is how the exam is structured:

  • Time Limit: 1 hour and 45 minutes.

  • Total Questions: 80 multiple-choice questions (giving you just under 1 minute and 20 seconds per question). Unanswered questions are automatically scored as incorrect, making time management a critical skill.

  • Scoring: Only 75 of the 80 questions count toward your final score.

The remaining five questions are considered "experimental." These are typically newly written questions FINRA is beta-testing to see how often candidates answer them correctly before making them official. FINRA does not distinguish between actual and experimental questions, so you will not know which is which on test day.

The Question Format

Every question is formatted as multiple-choice with four possible answers. For example:

Which of the following options strategies subjects an investor to unlimited risk?

A) Naked put

B) Short stock with a protective call

C) Covered call

D) Covered put

How the Exam is Graded

Candidates must score at least 70% to pass.

To ensure fairness, FINRA utilizes an "equating" feature. Your raw score is calculated immediately upon submission. Next, FINRA analyzes the overall difficulty of your specific exam. If you were randomly given a test with a large number of highly difficult questions, your final score is pushed slightly upward. Conversely, if your exam was statistically "easy," your score is pushed downward.

(Note: The difficulty of a question is generally measured by what percentage of past candidates answered it correctly).

After being assigned an official equated score, you will only receive a simple "Pass" or "Fail." Official numerical scores are only provided to candidates who fail to help them gauge how close they were.

The Four Sections of the SIE Exam

The SIE Exam is divided into four distinct sections. Here is a plain-English breakdown of what concepts you can expect to encounter in each area:

Section 1: Knowledge of Capital Markets (16% of exam / 12 questions)

This section covers how securities markets operate and are regulated. You must know the role of securities regulators (FINRA, SEC, Federal Reserve) and how they protect investors.

  • Key Test Areas: Market participants (broker-dealers, issuers, underwriters), market structure (primary vs. secondary markets), economic factors (Federal Reserve actions), and offering types.

Section 2: Understanding Products and Their Risks (44% of exam / 33 questions)

With nearly half of the total test questions, this is the largest and most prominent section. It is broken down into two main categories: investment products and their associated risks.

  • Key Test Areas: Stocks, debt instruments (bonds), options, packaged products (mutual funds, ETFs), alternative products (REITs), and identifying systematic vs. non-systematic risks.

Section 3: Understanding Trading, Customer Accounts, and Prohibited Activities (31% of exam / 23 questions)

As the second-largest section, this covers general trading practices, corporate actions, and the strict compliance rules that govern customer accounts.

  • Key Test Areas: Order types, trade settlement, investment returns, corporate actions (stock splits, mergers), account registrations (joint, fiduciary, discretionary), anti-money laundering (AML), and recordkeeping.

Section 4: Overview of the Regulatory Framework (9% of exam / 7 questions)

This is the smallest section of the exam, focusing entirely on the regulatory requirements you must follow once you enter the industry.

  • Key Test Areas: Qualification and registration requirements, continuing education, required form filings, red flags, and unethical or prohibited actions.

Ready to Start Studying?

Preparing for the SIE Exam can feel overwhelming, but you don't have to tackle thousands of complex topics on your own. At Basic Wisdom, we specialize in translating dense financial jargon into plain English. Whether you need structured, visual learning through our premium video courses or personalized guidance to conquer tough topics via one-on-one tutoring, we have the tools to help you master the material.

Brandon Rith