series 34 exam presentation

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Series 34 Exam

Retail Off-Exchange Forex Examination

By Bart Mallon, Esq.www.series34exam.com

Overview

• Background – Forex Registration• Series 34 Basics• Sections and Weighting• Major Exam Topics• Recommended Study Techniques• My Thoughts on the Exam• Questions• Disclaimer

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Background - Forex Registration

• Commodities Exchange Act– Regulation of commodities and futures trading– No previous regulation of Forex activities (except limited anti-fraud authority)

• Farm Bill– Passed by Congress on May 22, 2008– Major items with regard to off-exchange forex

• Codifies CFTC’s anti-fraud authority• Requires registration for Forex CTAs, CPOs, IBs• Minimum capital requirements for FCMs and FDMs

• New Forex Regulations– To be proposed by CFTC– Subject to comment period


Series 34 Exam Basics• Who?

– Principals and Associated Persons of a Forex CTA, Forex CPO, or Forex Introducing Broker

• What?– Number of Questions: 40 True/False and Multiple Choice – Time: 1 hour– Passing Score: 70%– Subject Matter: Retail Off-Exchange Forex– Cost: $70

• When?– Tests can be scheduled anytime

• Where?– Pearson and Prometric Testing Facilities

• How?– Submit online Form U-10 through FINRA website (no sponsor is needed)– Select exam time on Pearson or Prometric website

• Why ?– The CFTC is likely going to require forex managers to pass a proficiency exam. The NFA has designated the

Series 34 as that proficiency exam.


Sections and Weighting


Major Exam Topics

• Definitions and Terminology (10 questions)– American/European Terms– Currency pair, exchange rate,

currency crosses, cross rates– Interest rate parity

• Forex Trading Calculations (8 questions)– Profit and loss calculations**– Cross rate transactions– Pip values– Effects of leverage calculations

• Risks Associated with Forex Trading (4 questions)– Credit Risk– Country Risk– Exchange Rate Risk– Interest Rate Risk


• Forex Market - Concepts, Theories, Economic Factors and Indicators, Participants (10 questions)– BOP, BOT, current account, capital

account– Forex clearing – CHIPS, fedwire– Central bank activities –

interventions, sterilized interventions, discount rates

– Elasticity of exchange rates– Fisher effect, international Fisher

effect– Purchasing power parity

• Forex Regulatory Requirements (8 questions)– NFA Interpretive notices: Forex

Transactions, Rule 2-36(e)– Know your customer– Promotional material– Security deposit rules

My Thoughts on the Exam

• My scores– Definitions and Terminology 7 of 10 (70%)– Forex Trading Calculations 6 of 8 (75%)– Risks Associated with Forex Trading 3 of 4 (75%)– Forex Market - Concepts, Theories, Economic Factors and Indicators, Participants 6 of 10 (60%)– Forex Regulatory Requirements 8 of 8 (100%)– Total Correct – 30 of 40– Time to complete the exam – approximately 42 minutes

• Calculation heavy – Be prepared to use the calculator on the exam (approx. 5 questions)– Don’t spend too much time on any one question

• Note on Pacing

• Other– Shorting currency pairs– Current account, capital account, balance of trade, balance of payments– Regulatory questions pretty straight forward– Blog post: http://www.hedgefundlawblog.com/passing-the-series-34-exam.html

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Recommended Study Techniques

• Same techniques used to pass Series 3 exam

• Read a study guide

• Notecards

• Drill exam prep questions

• Review night before; study notecards before


Questions/ Issues to Consider

• What happens if I don’t pass?

• I have been an AP since May 22, 2008. Do I still have to register?

• Do I need a sponsor to sign up for the Series 3 exam or the Series 34 exam?

• When do I need to take the exam by?


Disclaimer

• This presentation was made for informational purposes only.

• I am not providing legal advice to any user.

• This presentation does not establish an attorney-client relationship between myself and the user.

• Any discussion herein is not a substitute for seeking actual legal advice from a licensed attorney with knowledge of the rules and regulations governing the industry.

• I make no representations, guarantees, or warranties as to the accuracy, completeness, currency, or suitability of the information provided via this presentation.

• This may be considered to be “attorney advertising” in some jurisdictions.

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Please send questions, comments or suggestions to Bart Mallon, Esq. at [email protected]

Other helpful websites:www.forexregistration.com

www.hedgefundlawblog.comwww.forexlawblog.com

series 34 exam presentation

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