Understanding Series 63: Meaning, Eligibility, Tips for Success, and Level of Challenge

What Is the Series 63?

The Series 63 is a crucial securities exam that grants individuals the authority to solicit orders for various securities within a specific state. Achieving a Series 63 license necessitates passing an examination that evaluates one’s understanding of ethical standards and fiduciary responsibilities.

Key Takeaways

• Applicants seeking a Series 63 license must demonstrate proficiency in ethical practices and fiduciary duties.
• The majority of U.S. states mandate the successful completion of the exam for all prospective registered representatives, encompassing principles of state securities regulations and restrictions on deceitful or unethical behaviors.
• Exceptions to the Series 63 requirement include Colorado, Florida, Louisiana, Maryland, Ohio, the District of Columbia, and Puerto Rico.

Understanding Series 63

In December 2018, the North American Securities Administrators Association (NASAA), the entity responsible for designing the Series 63 exam, updated its test content in response to recent tax code modifications. The exam no longer includes questions based on the 2018 tax code as of January 2019, with similar updates made to the Series 65 and Series 66 examinations.

Commonly referred to as the Uniform Securities Agent State Law Examination, the Series 63 is mandatory for most prospective registered representatives across the U.S., except in Colorado, the District of Columbia, Florida, Louisiana, Maryland, Ohio, and Puerto Rico.

This exam was created to qualify individuals aiming to work in the securities industry within a specific state and distribute investment products like mutual funds, variable annuities, and unit investment trusts. The exam focuses on state securities regulations, unique to each state through blue-sky laws formulated to oversee securities transactions.

Individuals must hold a Series 63 license in addition to a Series 7 or Series 6 license to trade securities.

Requirements for Series 63

Exam Format

The Financial Industry Regulatory Authority (FINRA) administers the Series 63 exam. The exam consists of 60 multiple-choice questions, requiring a passing score of at least 72% or 43 correct answers out of the total 60 questions. Candidates must complete the exam within a time limit of 75 minutes. As of March 2020, the exam fee amounts to $135.

Developed by the North American Securities Administrators Association (NASAA) in collaboration with industry experts, candidates for the exam must be familiar with the Uniform Securities Act of 1956 and the NASAA Statement of Policy and Model Rules. The Series 63 serves as an introductory exam without any prerequisites post-completion of the Form U-10.

Exam Topics

The Series 63 exam centers on state securities regulations and rules against dishonest or unethical conduct. Approximately 45% of the questions relate to regulations, 10% to administrative provisions, 20% to customer communication, and 25% to ethical practices and business responsibilities.

Topics covered in the exam include the registration of various individuals and securities, along with fiduciary obligations concerning client assets and securities. For further details, reference NASAA’s Test Specifications.

Passing the Securities Industry Essentials Exam (SIE) is a prerequisite for eligibility to undertake the Series 7 and Series 6 licensure exams, though not the Series 63. To deal in securities, broker-dealers must obtain the Series 63 license in addition to the Series 7 or Series 6 qualification.