Series 63

The Series 63, also known as the Uniform Securities Agent State Law Examination, is a securities license required by most states in the United States for individuals who want to sell securities. The license is administered by the Financial Industry Regulatory Authority (FINRA) and is designed to ensure that securities professionals have a strong understanding of state-level regulations and laws governing securities transactions.

The Series 63 exam was created by the North American Securities Administrators Association (NASAA) and was first implemented in 1979. This exam is one of several that securities professionals might need to take, depending on the scope of their responsibilities and the products they intend to sell. Typically, it’s taken in conjunction with other exams such as the Series 6, Series 7, or Series 79.

Exam Structure

The Series 63 exam consists of 60 multiple-choice questions, out of which 43 questions must be answered correctly to pass. The time allotted for the exam is 75 minutes. The key topics covered in the exam include:

1. State Securities Acts and Regulations
2. Ethical Practices and Fiduciary Obligations
3. Remedies and Administrative Provisions
4. Business Practices
5. Registration of Persons and Securities

Preparation and Study Materials

Preparing for the Series 63 exam generally requires substantial study, often involving multiple resources such as textbooks, online courses, and practice exams. Most candidates recommend at least 40-50 hours of dedicated study time, focusing on understanding both the conceptual and practical aspects of state securities regulations.

Key study materials often include:

• NASAA’s “Uniform Securities Act”
• Online courses and webinars offered by educational providers
• Exam prep books and practice exams from providers like Kaplan Financial Education, ExamFX, and Pass Perfect
• NASAA’s own study guide and content outline

Registration Process

To register for the Series 63 exam, candidates need to follow these steps:

1. Firm Sponsorship: Most brokerage firms or investment advisory firms must sponsor the candidates.
2. Form U4: The firm will file a Form U4 (Uniform Application for Securities Industry Registration or Transfer) with FINRA.
3. Scheduling: Once the form is approved, candidates can schedule their exam through Prometric, a testing service provider.
4. Fees: The fee for taking the Series 63 exam is $135, though it might be subject to change.

After the Exam

Upon passing the Series 63 exam, candidates are authorized to transact securities within the states that require this certification. However, merely passing the Series 63 does not permit one to sell securities; one must also pass other exams relevant to the specific securities or investment products they plan to sell.

Continuing Education

Maintaining the Series 63 license may not directly require continued education credits as some other licenses do, but securities professionals are subject to their firm’s policies and the overarching regulatory requirements ensuring they stay informed about changes in the laws and practices.

Integration with Other Licenses

The Series 63 is often considered a complementary license. For example:

• Series 6: Limited to mutual funds, variable annuities, and insurance products.
• Series 7: General securities representative license allows the sale of a broader range of investment products.
• Series 79: For investment bankers dealing with M&A and other advisory roles.

Professionals often hold multiple licenses depending on their roles, necessitating a good understanding of various overlapping regulations and compliance requirements.

Key Topics and Concepts

State Securities Acts and Regulations

A substantial portion of the Series 63 exam focuses on state securities laws, often referred to as “Blue Sky Laws.” These laws regulate the offer and sale of securities to protect the public from fraud. Topics include:

• Definition of securities
• Registration requirements
• Exempt transactions and securities
• Anti-fraud provisions

Ethical Practices and Fiduciary Obligations

Ethical practices are crucial for maintaining investor trust and market integrity. The Series 63 exam covers:

• Suitability of recommendations
• Disclosure obligations
• Prevention of conflicts of interest
• Fiduciary responsibilities

Remedies and Administrative Provisions

Understanding the remedies and actions that can be taken in case of violations of the state securities laws is essential. This includes:

• Rights and remedies available to investors
• Administrative actions by state securities administrators
• Penalties for unregistered activities and fraudulent practices

Business Practices

The Series 63 exam tests knowledge on acceptable business practices involving client relationships, handling funds, and maintaining records. This includes:

• Solicitation and advertising
• Fee structures and disclosures
• Record-keeping requirements
• Handling of clients’ accounts

Registration of Persons and Securities

Candidates must understand the registration process for securities professionals and the securities they intend to sell. This includes:

• Broker-dealer and agent registration
• Procedures for securities registration
• Exemptions from registration
• Maintenance of registration and renewals

Importance of the Series 63 Exam

The Series 63 exam is crucial for ensuring that securities professionals are well-versed in state-specific regulations and can adequately advise and protect their clients. As the financial industry evolves, having a comprehensive understanding of varied regulatory landscapes helps professionals navigate complex market conditions effectively.

Links for Reference

For more detailed information on the Series 63 exam, study materials, and registration details, you can visit the following links:

• NASAA: NASAA Series 63 Exam
• FINRA: FINRA Series 63 Exam