The Series 63 is a securities exam and license enabling its holder to solicit orders for any type of security within a particular state. This license is particularly critical due to its emphasis on ethical practices and fiduciary obligations. To acquire a Series 63 license, the applicant needs to not only pass an exam but also demonstrate knowledge of ethical standards and fiduciary duties.
Key Takeaways
- Applicants must pass the exam and display proficiency in ethical practices and fiduciary obligations to obtain the Series 63 license.
- Most U.S. states require aspiring registered representatives to pass the exam, which encompasses principles of state securities regulations and rules against dishonest or unethical practices.
- Colorado, Florida, Louisiana, Maryland, Ohio, the District of Columbia, and Puerto Rico are exceptions and do not mandate the Series 63.
Understanding Series 63 License
Since December 2018, the North American Securities Administrators Association (NASAA), the organization responsible for crafting the Series 63 exam, updated its questions in response to recent changes in the tax code. Questions based on older tax codes were phased out by January 2019. The Series 63 license, also known as the Uniform Securities Agent State Law Examination, is a prerequisite for potential registered representatives across most U.S. states. Despite being a federal norm, Colorado, the District of Columbia, Florida, Louisiana, Maryland, Ohio, and Puerto Rico do not adhere to this requirement.
The exam is designed to certify candidates who are aiming to work within the securities industry at the state level, providing them the ability to sell investment products like mutual funds, variable annuities, and unit investment trusts. It covers the foundational principles of state securities laws, known colloquially as blue-sky laws, which are crafted to oversee securities sales. To sell securities, agents must possess both a Series 63 license and additional licenses like Series 7 or Series 6.
Requirements for Series 63
Exam Format
The Financial Industry Regulatory Authority (FINRA) administers the Series 63 exam, consisting of 60 multiple-choice questions. To pass the exam, a candidate must attain a score of at least 72%, equivalent to answering 43 out of 60 questions correctly. The exam duration is 75 minutes, and the cost, as of March 2020, is $135.
The NASAA developed this exam in collaboration with industry specialists. It necessitates familiarity with the Uniform Securities Act of 1956 as well as the NASAA Statement of Policy and Model Rules. The Series 63 exam is viewed as an entry-level exam, requiring candidates to complete Form U-10, but possesses no other prerequisites.
Exam Topics
The Series 63 examination concentrates on state securities regulations and anti-fraud rules. The exam breakdown is as follows: approximately 45% of the questions cover regulations, 10% cover administrative provisions, 20% cover client communication, and 25% cover ethical practices and business obligations.
Specific exam topics include the registration of individuals and securities, along with the fiduciary responsibilities regarding client funds and securities. For detailed topic outlines, you may refer to NASAA’s Test Specifications.
Conclusion: If you aspire to trade securities, it’s crucial to understand that apart from the Series 63, you must also clear higher-level exams like the Series 6 or Series 7. Each has its own specifics and objectives.
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Related Terms: Series 7, Series 6, Uniform Securities Act, fiduciary duty, investment products
