For individuals aspiring to pursue a career in investment, various paths are available to become licensed professionals in trading and investing securities like stocks and bonds. One common route is through passing the challenging Series 7 exam, overseen by the Financial Industry Regulatory Authority (FINRA).

While the Series 7 is a significant milestone, it restricts professionals to a limited set of investment options for clients. An alternative path involves taking the Series 3 exam, also known as the National Commodity Futures Examination, which enables individuals in the U.S. to offer alternative investments in commodities and futures.

The Series 3 License and Exam

The Series 3 exam, mandated by the National Futures Association (NFA) and the Commodities Futures Trading Commission (CFTC), is comprehensive and covers market knowledge and regulatory requirements.

Career Paths

Branch Managers oversee APs and branch operations by passing the Series 30 exam, testing knowledge on NFA and CFTC regulations. Introducing Brokers (IB) can register with the NFA without additional licensing after passing the Series 3, taking on the liability and rewards of direct client interaction.

Individuals passing the Series 3 may pursue roles like Commodity Trading Advisors (CTA) or Commodity Pool Operators (CPO) to manage clients’ funds, requiring registration with the CFTC and NFA.

Managing Clients’ Money

CTAs and CPOs can collect management and performance fees based on assets under management, offering money management services with strict regulatory compliance.

Exams for Licensed Brokers

Licensed brokers can broaden their expertise by taking exams like Series 31 for assisting CTAs and CPOs, or Series 32 for entry into U.S. futures structure, enabling roles as IB, CTA, CPO, or FCM.

The Bottom Line

Becoming a commodities or futures broker presents diverse opportunities beyond the Series 3 exam, leading to managing brokers, starting an independent brokerage, or handling client funds with tremendous growth potential.