Definition
Series 63 is a securities license, issued by the Financial Industry Regulatory Authority (FINRA), that qualifies individuals to sell securities in a specific state. It is also known as the Uniform Securities Agent State Law Examination. This license is necessary for anyone looking to work as a securities agent at the state level in the U.S.
Phonetic
The phonetics of the keyword “Series 63” is: Seer-eez Six-Three
Key Takeaways
- The Series 63, also known as the Uniform Securities Agent State Law Examination, is a standardized exam administered by the Financial Industry Regulatory Authority (FINRA). It’s required for individuals seeking to become licensed securities agents within the United States.
- The examination is designed to assess the candidate’s knowledge of state laws and regulations that pertain to the securities industry. This includes understanding the principles of state securities regulation for agents, investment advisers, broker-dealers and securities issuers.
- Exam candidates are tested on topics such as communication with customers, ethical practices and fiduciary obligations, business economic concepts, and the analysis of securities and investments. A passing score on the Series 63 exam is 72%, which demonstrates that the candidate has a solid understanding of these areas in the context of the securities industry.
Importance
The Series 63, also known as the Uniform Securities Agent State Law Examination, is crucial in the business and finance sectors as it is a standardized test that determines an individual’s qualification for selling securities, such as stocks, bonds, or mutual funds at a state level. Passing this exam is a requirement for most U.S. states to obtain a license to conduct securities business. The Series 63 test covers principles of state securities regulation reflected in the Uniform Securities Act. Thus, its importance lies in certifying a professional’s understanding of necessary legal aspects of the securities industry, enhancing their credibility and clients’ trust, enabling them to operate in compliance with state laws.
Explanation
The Series 63, formally known as the Uniform Securities Agent State Law Examination, is primarily designed to qualify individuals as securities agents within the United States. It was developed by North American Securities Administrators Association (NASAA) and managed by Financial Industry Regulatory Authority (FINRA). The main purpose is to set a standard ethical practices and state law guidelines within the securities industry across the U.S. It is essentially meant to safeguard the investing public by ensuring that individuals involved in the selling or promoting of financial securities products uphold high standards of professional conduct.
The usage of Series 63 license extends in selling investment products such as mutual funds, variable annuities, and variable life insurance policies. It evaluates the applicant’s knowledge and understanding of state laws and regulations, as well as the ethical obligations towards the investors. Passing the Series 63 exam authorizes the license holder to solicit orders for any type of security in respective states. It is important to note that the Series 63 license in itself does not authorize an agent to sell securities, but rather, it is meant to be obtained in addition to other necessary securities licenses.
Examples
1. Financial Advisor: A financial advisor who wants to provide comprehensive investment advice must pass the Series 63 exam. It authorizes them to execute investment transactions on behalf of their clients, like buying or selling stocks, bonds, and other investment products.
2. Stockbroker: A stockbroker typically needs to hold a Series 63 license in order to lawfully execute trades and transactions. This might include operations such as purchasing stocks, bonds, and other securities to help clients grow their investment portfolios.
3. Mutual Fund Manager: The Series 63 license allows a mutual fund manager to both buy and sell funds for their clients. The manager will use this privilege to assemble a collection of mutual funds, aiming to meet the specific investment goals outlined by the clients.
Frequently Asked Questions(FAQ)
What is 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. It’s intended to gauge an applicant’s knowledge and understanding of state law and regulations.
Do I need a specific degree to obtain the Series 63 license?
No specific degree is needed to obtain the Series 63 license, but a rigorous examination conducted by the Financial Industry Regulatory Authority (FINRA) must be passed.
What’s the format of the Series 63 exam?
The Series 63 Exam consists of 60 questions that are multiple-choice. Candidates are given 75 minutes in which to complete the exam.
What is the passing score for the Series 63 exam?
To pass the Series 63 exam, you need to correctly answer at least 43 of the 60 scored questions.
How often can I take the Series 63 exam if I do not pass?
If you do not pass the Series 63 exam, there are restrictions on retesting. After the first failure, you must wait 30 days. After the second failure, another 30-day wait is required. After three or more failures, a 180-day wait period is mandatory.
What topics are covered in the Series 63?
The Series 63 covers laws, regulations, ethics and securities practices, with the focus being on understanding regulations within the context of ethical considerations and fiduciary obligations.
What kind of job can I get with a Series 63 license?
The Series 63 licenses individuals as securities agents. People with this qualification typically work as stock brokers, investment advisors, or bank representatives.
How can I prepare for the Series 63 Exam?
Preparation methods can vary from person to person, but many individuals find success with using study guides, attending prep courses, or completing practice questions and exams.
Is there any professional experience requirement to appear for the Series 63 exam?
No, there is no professional work experience prerequisite to appear for the Series 63 exam.
Related Finance Terms
- Uniform Securities Act: This is the framework for state law that governs most securities-related transactions.
- Blue Sky Laws: These are state regulations introduced to protect investors from securities fraud.
- Investment Advisor: A professional who provides advice about securities to their clients.
- NASAA: The North American Securities Administrators Association is the organization that provides the Series 63 exam.
- Fiduciary Duty: A legal obligation to act in the best interest of another party. The person who has this obligation is called a fiduciary.
