What is the Series 63
The Series 63 is a securities exam and license entitling the holder to solicit orders for any type of security in a particular state. Agents must acquire the Series 63 license, in addition to a Series 7 or Series 6 license, to sell securities.
To obtain a Series 63 license, the applicant must pass an exam and possess knowledge of ethical practices and fiduciary obligations. As of Dec. 2018, the North American Securities Administrators Association (NASAA), which creates the Series 63 exam, had updated its questions in light of recent changes to the tax code. Questions based on the 2018 tax code were rolled out in Jan. 2019. Questions for the Series 65 and Series 66 exams were also updated.
Breaking Down Series 63
The Series 63 (formally known as the Uniform Securities Agent State Law Examination) is a registered exam that is required of all potential registered representatives in most of the U.S. states—Colorado, Florida, Louisiana, Maryland, New Jersey, Ohio, Vermont, the District of Columbia and Puerto Rico do not require the Series 63.
The exam was developed to qualify candidates who want to work in the securities industry within a state and to sell investment products, such as mutual funds, variable annuities and unit investment trusts. The exam covers the principles of state securities regulations. Each state has its own securities regulations, called blue-sky laws, which were developed to regulate the sale of securities.
The Series 63 Exam Format
The Financial Industry Regulatory Authority (FINRA) administers the Series 63 exam. There are 65 multiple-choice questions on the exam; 60 questions are used for the final score, while the other five questions are used for pretesting into the question bank. The passing score is 72% or 43 of the 60 questions. The candidate must complete the exam within the allotted time of 75 minutes. As of Dec. 2018, it costs $135 to take the exam.
The North American Securities Administrators Association (NASAA) developed the exam along with representatives of the securities industry. Candidates for the exam need to be familiar with the Uniform Securities Act of 1956 and the NASAA Statement of Policy and Model Rules. The Series 63 is an entry-level exam; there are no prerequisites for the exam after completing the Form U-10. For more, see the FINRA's Series 63 informational page.
Topics Covered on the Exam
The Series 63 exam covers the principles of state securities regulations and rules prohibiting dishonest or unethical practices. Forty-five percent of the questions pertain to regulations, 10% for administrative provisions, 20% for customer communication and 25% for ethical practices and business obligations.
The topics on the exam include registration of various persons and securities and fiduciary responsibility with client funds and securities. For more, see NASSA's Series 63 Overview and Test Specifications.
After successfully completing the Series 63 exam, the representative is eligible to take the Series 7 and Series 6 license exams. To sell securities, broker-dealers must obtain the Series 63 license as well as the Series 7 or Series 6.