What Is the Series 63 License and Who Needs to Pass It?
Understand the Series 63 license: its role in state securities regulation, who requires it, the knowledge tested, and the complete certification process.
The Series 63 exam, officially known as the Uniform Securities Agent State Law Examination, assesses an individual’s understanding of state securities laws and regulations. It is developed by the North American Securities Administrators Association (NASAA) and administered by the Financial Industry Regulatory Authority (FINRA). The primary goal of this examination is to ensure that individuals representing broker-dealers and investment advisers possess the necessary knowledge to comply with state-level requirements. Passing the Series 63 exam helps qualify financial professionals to conduct securities business within various states.
Purpose and Scope of the Series 63
The Series 63 examination serves an important role in state-level securities regulation by focusing on investor protection. It ensures financial professionals understand state rules for public protection. This exam is required for registered representatives of broker-dealers and certain investment adviser representatives. These professionals must pass the Series 63 to conduct securities business legally within a state.
The examination complements federal securities laws by focusing on state-specific regulations. It ensures industry professionals understand state laws, ethical practices, and prohibited activities. This understanding maintains financial market integrity and protects investors from fraudulent conduct. Passing this exam demonstrates commitment to state securities standards.
Key Topics Covered on the Exam
The Series 63 exam covers state securities regulation. It focuses on the Uniform Securities Act (USA), a model for state securities laws. Topics include definitions of securities and persons (broker-dealers, agents, investment advisers, investment adviser representatives), and transaction types. Candidates must also understand registration requirements for persons and securities, including exemptions.
The exam also addresses ethical practices and fiduciary obligations. It covers conduct, client communication, and preventing dishonest practices. Topics include conflicts of interest, handling client funds, and prohibited activities like market manipulation or insider trading. Understanding these principles helps financial professionals operate lawfully and ethically, prioritizing client interests.
Requirements for Taking the Series 63 Exam
Before taking the Series 63 exam, prerequisites must be met. While a sponsor is not always required for the Series 63, most candidates pursue it with other securities licenses. Candidates are often sponsored by a FINRA member firm or another self-regulatory organization (SRO) member firm. The sponsoring firm initiates registration by filing a Uniform Application for Securities Industry Registration or Transfer (Form U4) through the Central Registration Depository (CRD) system.
Candidates for registered representative roles typically pass the Securities Industry Essentials (SIE) exam and a “top-off” exam (e.g., Series 7) before or with the Series 63. Investment adviser representatives often need a Series 65 or Series 66 exam with the Series 63. These co-requisite exams provide broad industry understanding, while the Series 63 covers state law nuances. Meeting these requirements is necessary before scheduling the Series 63.
The Series 63 Examination Process
After meeting prerequisites, including firm sponsorship and co-requisite exams, candidates can begin the Series 63 process. The sponsoring firm registers the candidate through FINRA’s Central Registration Depository (CRD) system, providing a 120-day window to schedule the exam. Candidates schedule their exam through a testing vendor (e.g., Prometric or Pearson VUE), choosing a convenient date and location.
The Series 63 is a computer-based exam. It has 65 multiple-choice questions: 60 scored and 5 unscored pre-test questions. Candidates have 75 minutes to complete it. A passing score of 72% requires correctly answering at least 43 of the 60 scored questions. Results are provided immediately at the testing center.