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July 31, 1998

How Well Do You Know Trading? Get the Answer At New Series 55 Exam

By Michael L. O'Reilly

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Jay Suskind, head trader at Ryan Beck & Co. in West Orange, N.J., is frustrated. He must eventually sit for an exam he doesn't think is necessary. And he's too busy to get all the details.

Suskind is one of about ten professionals at Ryan Beck taking the new exam, recently introduced by the National Association of Securities Dealers for Nasdaq and over-the-counter traders.

At the moment, the Limited Representative-Equity Trader Examination, or Series 55, is a challenge for Suskind, given his other professional priorities.

Suskind hasn't seen the exam materials, and hasn't taken time to study. Frankly, he says, his busy workload doesn't allow him the necessary time to prepare for the exam.

Not to worry, though, Suskind was given a two-year grace period to pass a grace period granted, as of mid-July, to more than 15,000 professionals who registered for the exam ahead of the August 31 deadline. Suskind and the other professionals must pass the exam by May 1, 2000.

Even so, Suskind, a ten-year trading veteran, has reservations.

"The NASD could probably do a better job educating its members with regular training programs," he said. "I can understand the NASD testing new traders, but I doubt anyone trading has time to study for a new exam."

Sooner or later, however, all market makers, trading supervisors, agency traders and proprietary traders in Nasdaq, OTC and convertible-debt securities must take the 90-question Series 55.

Not all traders share Suskind's pessimistic view about the Series 55. To be sure, traders must juggle study time with their professional duties, but many acknowledge the exam's fundamental importance.

"Continuing education is never a problem," said Lou Todd, head of trading at J.C. Bradford & Co. in Nashville. "I just want our traders to get the exam out of the way so they can get back to business."

More than 30 traders from Todd's firm will sit for the Series 55 starting in August.

The exam will test traders in market making, trading systems, reporting rules, securities regulations and in other areas of responsibility.

The NASD said the Series 55 will help to establish consistent standards among professionals of the rules and regulations that affect their business.

The roots of the exam date back to the Securities and Exchange Commission's and the Department of Justice's 1995 investigations of Nasdaq.

"The exam is a way of ensuring that traders have been tested, and can be held accountable if they don't follow trading rules," said John Ramsay, deputy general counsel at NASD Regulation, the NASD's regulatory arm.

"The NASD, of course, is not naive enough to think the exam will stop infractions among traders," he added. "But the test makes sure everyone has a basic level of understanding."

John Pinto, who was a senior official at NASD Regulation when the Series 55 was first proposed, said the initiative for the exam was taken by NASD Regulation's Market Surveillance Committee.