FINRA Rules to Know for the SIE Exam

If you're preparing to take the SIE exam, it's important that you know all of the FINRA rules that will be covered on the test. In this blog post, we will go over three key rules that you need to know for the SIE exam: Rule 2266, which covers SIPC information; Rule 2269, which deals with disclosure of participation or interest in a primary or secondary distribution; and Rule 5250, which covers payments for market making. We'll provide a brief description of each rule and tell you how it is relevant to the SIE exam.

FINRA Rule 2266

FINRA Rule 2266, also known as SIPC information, details the role of SIPC and how it protects investors in the event of broker insolvency. SIPC is an organization that acts as a safety net for investors, providing them with coverage up to certain limits in the event that their broker becomes insolvent. SIPC ensures that investors' accounts are fully liquidated and returned to them within certain time-frames. SIPC protects investors against losses resulting from the failure of securities firms, but not against any losses caused by stock market declines or other factors outside of the firm. This rule will be important for you to know if you are planning to take the SIE exam, as SIPC coverage is one of the most common topics covered on this test.

FINRA Rule 2269

FINRA Rule 2269, also known as disclosure of participation or interest in a primary or secondary distribution, is another key rule to know for the SIE exam. This rule requires that brokerage firms disclose any participation or interest they have in an investment offering before recommending it to their clients. For example, if a firm is involved in the primary distribution of a stock or is receiving fees or compensation in connection with the sale of that stock, they must disclose this information to their clients prior to making any recommendations. This rule helps ensure that investors are fully informed about the potential conflicts of interest that may exist between their brokerage firm and the investments they are being recommended.

FINRA Rule 5250

FINRA Rule 5250, also known as payments for market making, is a key rule to know if you are taking the SIE exam. This rule requires that firms engaging in market making activities make certain disclosures to clients prior to executing any trading orders. Specifically, firms must disclose any fees and commissions they will receive from their broker-dealer in connection with the market making activity, as well as whether those fees will be based on specific transactions or consist of a flat-fee. In addition to these disclosures, firms must also clearly outline their trading policies and written procedures for handling client orders. Understanding this rule is crucial to passing the SIE exam, as payments for market making activities are often examined on this test.

If you're studying this material for the SIE exam, it's essential that you know all of the key FINRA rules and how they relate to the test. Whether you're preparing for SIPC information, disclosure of participation or interest in a primary or secondary distribution, or payments for market making, there is important information that you need to be familiar with in order to succeed on the SIE exam. Achievable offers a free SIE FINRA practice exam to prepare you for the SIE Exam. Check out Achievable's website to get started.