Series 63: Definition, Requirements, Topics, and Difficulty

Overview

• Series 63 Exam: Known as the Uniform Securities Agent State Law Examination.
• Purpose: Ensures securities agents understand state-specific regulations and ethical practices.
• Administrators: North American Securities Administrators Association (NASAA) & Financial Industry Regulatory Authority (FINRA).
• Importance: Facilitated a unified regulatory framework for brokers operating across state lines.

Key Takeaways

• Focus on ethical practices and fiduciary obligations.
• Required in most U.S. states except Colorado, Florida, Louisiana, Maryland, D.C., and Puerto Rico.

Historical Context

• Introduced in 1979 to standardize securities regulations across states.
• Addresses state-level regulations, known as 'blue sky laws'.

Exam Format and Structure

• Questions: 65 multiple-choice questions (60 scored, 5 unscored).
• Passing Score: 43 out of 60 (72%).
• Time: 75 minutes.
• Testing Method: "On-the-fly testing" to ensure fairness and consistency.

Topics Covered

1. Regulation of Investment Advisers
   • Definition and registration requirements.
   • 3 questions, 5% weight.
2. Regulations of Investment Adviser Representatives
   • Activities requiring registration.
   • 3 questions, 5% weight.
3. Regulation of Broker-Dealers
   • Legal definitions and registration processes.
   • 7 questions, 12% weight.
4. Regulations of Agents of Broker-Dealers
   • Registration processes and post-registration obligations.
   • 8 questions, 13% weight.
5. Regulations of Securities and Issuers
   • Security definitions and state registration requirements.
   • 5 questions, 9% weight.
6. Remedies and Administrative Provisions
   • State regulators' powers and penalties.
   • 7 questions, 11% weight.
7. Communication with Customers and Prospects
   • Requirements and prohibitions.
   • 12 questions, 20% weight.
8. Ethical Practices and Obligations
   • Fee structures, trading practices.
   • 15 questions, 25% weight.

Comparison with Other Exams

• Often taken with Series 7 (federal focus) and Series 6 (mutual funds).
• Series 63 provides state-specific regulatory knowledge.

Requirements and Scheduling

• Age: 18+
• Registration: Form U4 submission by broker-dealer or independent scheduling.
• Fee: $147.

Retake Policy

• 30-day wait after first two attempts, 180-day wait after third.

Post-Exam Considerations

• Must obtain state license within two years.
• Registration validity: Two-year grace period between jobs.

Important Notes

• Series 63 is crucial for state registration; exceptions exist in certain states.
• Often required alongside other qualifications for securities sales.