The Series 63 is administered by the Financial Industry Regulatory Authority (FINRA) and is required by all states under the Uniform Securities Act. FINRA is an agency under the North American Securities Administrators Association (NASAA). A holder of the Series 63 license is qualified to trade securities any place in the United States, and Series 6 and 7 license holders who wish to advise and transact are required to have this license as well.
Once a person completes this test, he or she still has limited authority to transact with stock, bonds, and other securities. The Series 63, sometimes called the blue sky test, is shorter than most securities exams because it covers less material; however, the questions could be more complicated and a little tricky. The time limit for the test is one hour and fifteen minutes, with sixty questions and five pretest questions.
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Most questions test a person’s knowledge on state securities rules and regulations, ethical practices and fiduciary obligations, record keeping, soliciting customers, and technical terminology. This multiple-choice test requires a 72% passing score, and the exam is given every day of the week except Sundays. Results of the test are provided immediately to the candidate with his or her overall test score.
A sponsoring firm usually fills out the necessary paperwork for the candidate to take the test along with a Form U4, which must be complete. The Series 63 exam is different than most in that a sponsoring firm is not necessary. A candidate may sign up for the test him- or herself and submit Form U10 instead.
Tests are administered at a Prometric testing center in most states close to the candidate’s place of residence and are even provided outside the country. Once a person passes the exam, he or she is required to abide by the laws set forth by the state regulation to protect the investing public. Unlike most exams, there is a waiting period to reapply to take the test should a candidate fail the exam.
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Many sponsoring firms are under pressure to report the number of times a broker fails the Series 63 test. Upon passing the test, a person has two years to become licensed with a state, or the exam is no longer valid. The good news is that, once a person gets licensed (or registered), the exam does not expire.
In addition, a criminal background check, credit check, and bonding are usually required to determine the trustworthiness of an applicant before a license is granted.
A background in finance is not required; however, it is important that the person have an interest in the field to provide the best investment guidance. To be prepared for the exam, a candidate should be very knowledgeable with terms, know that an agent is an individual who represents a broker dealer, and understand that an agent is a registered or licensed representative who sells securities to the public.
It is also important to know about antifraud rules and the fact that that no security is exempt from filing requirement under the Uniform Securities Act. All the state rules that protect the securities industry were created under the blue sky laws, and a broker should be conscience of divulging insider information to the public.
Of course, an agent should be familiar with the prospectus or legal document that summarizes the offering filed with the Securities & Exchange Commission (SEC) as well as the importance of historical performance when providing advice and registering in every state that he or she sells securities in.
The Series 6 license is also required for insurance agents who sell variable products. Anyone who supervises Series 6 license holders must have the license themselves as well as the Series 26.
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by Enoch Morrison | Last Updated: January 9, 2019