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    Licenses

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      Series 63

      Series 63 exam – Uniform Securities Agent State Law Exam is a Financial Industry Regulatory Authority (FINRA) administered securities exam.

      This exam was introduced by the North American Securities Administrators Association (NASAA) in collaboration with relevant securities industry associations and representatives. 

      The summary of what the Series 63 exam entails is the principles guiding state securities regulations. 

      These principles are well captured in the Uniform Securities Act, having updated amendments implemented by NASAA and other laws prohibiting unlawful and unscrupulous business practices. 

      The exam is beneficial to state securities administrators in easing the evaluation process of candidates taking the Series 63 exam to ascertain their grasp of state law and regulations. 

      Series 63 exam is a qualifying exam for individuals who want to become securities agents. 

      Series 63 Exam Structure

      The Series 63 exam is a multiple-choice exam having a total of 65 questions. 

      5 of these 65 questions are pretest questions that do not add to the exam’s overall score. 

      The pretest questions are only made available in the exam to have a set of questions added to the scored exam in the future.

      These 5 pretest questions are distributed in the 65 question pool randomly.

      Ideally, only 60 questions are scored in a Series 63 exam.

      The amount payable to sit for and write the Series 63 exam is $147. 

      75 minutes is the time a candidate is allowed to take the Series 63 exam. 

      The Series 63 exam is not an open-book exam but a closed-book exam to test the actual competence of candidates intending to be securities agents.

      Though Series 63 is a much shorter exam covering less material than FINRA exams, it is not a simple exam as excellent attention to detail is required to ace the exam. 

      The Series 63 exam questions are not straightforward, so a proper understanding of the context of each topic is crucial to passing the exam. 

      Candidates taking the Series 63 exam are provided with scrap paper to do “rough work” in the exam without writing on either the question or answer booklets.

      This scrap sheet is provided by the proctor responsible for an exam, and it is on request that candidates get the scrap paper. 

      A process called the “on the fly” is employed by FINRA to assemble the Series 63 exam questions.

      In the assembly of these exams questions, two parameters are put into consideration; these are:

      1. The Content Parameter
      2. The Difficulty Parameter. 

      The content and difficulty parameters come in handy when putting together exam questions to ensure that the difficulty level and the content covered are uniform with others in the same Series exam. 

      Also, each exam question in the Series 63 is analyzed statistically to ensure they meet reliability criteria. 

      The Series 63 exam questions and other NASAA developed exams (Series 65 and Series 66) are approved by NASAA or authorized committees.

      Other aspects checked and approved by NASAA are:

      • Exam study guide
      • Method of administering the exam
      • The weighting of the various composite of the exam

      Throughout the U.S., Series 63 is the same and can be taken at any Prometric test center of your choice. 

      Guide to Preparing for the Series 63 Exam 

      The Series 63 study guide is met to provide candidates with appropriate information on the exam’s content and format before taking the exam.

      The study guide is particularly very useful as a final reference material just before taking the exam. 

      In addition, candidates taking the Series 63 exam should endeavor to study well for the exam and have a proper grasp of the information in the area of:

      • Uniform Securities Act
      • Model Rules (NASAA adopted)
      • Statements of Policy

      A more significant part of the Series 63 exam is focused on state securities requirements throughout the U.S.

      Series 63 Exam Registration Procedure

      To register for the Series 63 licensing exam, there are specific procedures to take to enroll for the exam successfully. These are outlined below: 

      • Visit FINRA.org to register for the Series 63 exam
      • A sponsoring firm should file form U4 on your behalf of a candidate if the firm has membership affiliation with FINRA.
      • Also, candidates who are unemployed or whose firms are not FINRA member firms can file for the form U4 independently and pay $147.
      • On completing the exam registration process, you will get access to a 120-day window period, within which you are required to schedule your exam. 

      Series 63 Pass Rate

      To pass the Series 63 exam, candidates must correctly answer at least 43 questions out of the 60 questions scored. 

      The 43/60 ratio means that for candidates to pass the Series 63 exam, they must have at least 72% in the exam.

      The final examination score is made available to each candidate after completion of the exam.

      The above only shows transparency in the Series 63 exam developed by NASAA and administered by FINRA.

      The Series 63 exam is designed for professionals in the investment industry with a minimum passing criterion in place for such professionals. 

      The minimum competency level of candidates is ascertained by whether or not such candidates attain the minimum passing score of the exam.

      Candidates who attain the minimum score have met the minimum criterion, while those who fail to achieve it do not meet the minimum criterion.

      Series 63 License 

      For an individual to obtain the license and be able to conduct business in the securities industry as a securities agent, they must:

      1. Take the Series 63 exam – Uniform Securities Agent Law Exam.
      2. Pass the Series 63 exam
      3. Get acquitted with and obey the securities laws and regulations set out by the state where business is transacted.

      There is no corequisite for obtaining the Series 63 license, unlike Series 66 that has Series 7 as a corequisite for obtaining its consent (Series 66).

      NASAA projects that the unifying nature of the Uniform Securities Agent Law Exam makes it ideal and beneficial to both state and securities industry regulators.

      Possession of the Series 63 license by qualified professionals, gives investors a sense of reliability and assurance that they are dealing with credible professionals.

      Series 63 Waiting Period 

      The waiting period of a qualification exam is the period that must elapse after failing a licensing exam before re-enrolling for the same exam. 

      The Series 63 exam has the following waiting period spelled out below:

      1. At least 30 days must elapse after failing the exam on your first try before rescheduling for another exam.
      2. At least 30 days must elapse after failing the exam on your second try before rescheduling for another exam.
      3. At least 180 days must elapse after failing the exam on your third try before rescheduling for another exam.
      4. For subsequent rescheduling of the exam, at least a 180 day period must elapse before enrolling to take the exam. 

      These waiting periods are the same as other FINRA examinations. 

      Series 63 Exam Compromise Penalty

      FINRA has a stringent process for administering qualifications exams. 

      Compromise of the examination in any form is grossly frowned at and not permitted.

      Compromising the Series 63 exam defeats the reason for the exam in the first place, which is to test the competence of individuals wanting to be securities agents. 

      Strict penalties apply to anyone found guilty of compromising the Series 63 exam by way of examination malpractice of any kind. 

      Any examination compromise, whether in part or in full, will be handled seriously by NASAA, and appropriate action will be taken against any such candidate.

      Depending on the extent of the exam compromise, state administrators may also take action against any candidate found wanting. 

      Registered Representative (RR)

      As the name suggests, a registered representative (RR) is a financial professional who acts as a representative in trading securities and investment products on behalf of clients.  

      Registered representatives readily work for financial firms such as brokerage firms. 

      RRs can function in three respects listed below:

      1. Brokers
      2. Portfolio managers
      3. Financial advisors 

      Registered Representative Licencing

      Registered Representatives are only permitted to transact business by way of selling securities only after being duly licensed.

      Outlined below are what must be satisfied by a RR to get licensed and sell securities legally. 

      1. Get sponsorship from a FINRA member firm 
      2. Must ace appropriate licensing exams 
      3. Must have regulation from FINRA and SEC
      4. Must adhere to regulatory standards

      In line with what has been mentioned above, candidates must pass licensing exams, including the FINRA Series 7 – General Securities Representative Examination and Series 63 examination, as essential steps towards becoming certified as registered representatives (RR). 

      The legacy Series 7 exam was split in October 2018 to become Securities Industry Essentials (SIE) and Series 7 Top-Off.

      FINRA Series 7 and Series 63 licenses authorize professionals that hold them to perform distinct functions concerning transacting securities. 

      The Series 7 license authorizes RRs to transact (buy and sell) the following:

      • Options
      • Stocks
      • Municipal securities 
      • Mutual funds
      • Variable contracts like insurance/annuity products

      However, there are certain securities transactions that licensees cannot perform, such as the sale of life insurance, real estate and, commodities futures.

      The Series 63 license, on the other hand, authorizes RRs to transact the following:

      • Unit Investment Trusts (UITs)
      • Variable Annuities 

      For most states in the U.S., the minimum criteria of being a registered representative are to pass the Series 63 exam and meet specified state law registration requirements peculiar to a state.

      What is the Series 65 exam?

      The Series 65 exam is better known as the Uniform Investment Adviser Law Exam. 

      This Series 65 exam was introduced by the North American Securities Administrators Association (NASAA).

      The administration of the Serie 65 exam is handled by the Financial Industry Regulatory Authority (FINRA).

      FINRA and NASAA work conjointly to deliver and administer the Series 65 exam, with each body having specific functions.

      The Series 65 exam is designed for and is integral to becoming an investment adviser representative (IAR). 

      The above has helped structure the exam content to cover topics crucial to good knowledge to effectively provide investment advice to clients.

      The Series 65 exam, an exam met to test candidates who want to transact business as IAR, is a closed book exam. 

      Scores of each section and the overall exam are made available to candidates at the end of the exam. 

      In addition to passing the Uniform Investment Adviser Law Exam, candidates must observe the laws and regulations of the state in which they transact business.

      Passing the Series 65 exam is a crucial part of obtaining the Series 65 license. 

      However, the professional must get licensed by the state where the license will be used in transacting business. 

      The Series 65 exam can be taken in any U.S. state because the exam is the same in all states. 

      Series 65 exam can be taken in any Prometric test center that a candidate prefers.

      Series 65 | Exam Content and Passing Rate

      The Series 65 exam has several questions that make up the exam. 

      Therefore, 130 questions are in the Series 65 exam.

      Of these 130 questions, 10 of them are pretest questions. 

      The above brings the total number of scored questions in the Series 65 exam to 120 questions. 

      To pass the exam, a candidate must answer at least 94 questions correctly; the passing score is 94/130.

      Thus, the passing rate is 72%, the minimum percentage a candidate must attain to pass the exam. 

      The Series 65 exam covers topics in very core topical areas. 

      Questions asked in the Series 65 exam are centered around the following areas:

      • The U.S.
      • Professional ethics with the financial industry
      • Investment strategies
      • Investment vehicles
      • Analysis
      • Economics 

      Series 65 Exam | Registration

      The register for the Series 65 exam, candidates need to enroll with FINRA.

      Candidates can take the following steps to enroll successfully for the exam; these are as follows:

      • Candidates should visit FINRA.org to start Registration.
      •  Candidates working for a firm with membership affiliation with FINRA can have their firm file the electronic Form U4.
      • Form U4 can also be filed by an unemployed individual or whose firm has no affiliation with FINRA.
      • Candidates should open an enrollment window.
      • Payment of the $187 exam fee should be made afterwards. 

      The enrolment window is open for 120 days, within which candidates can schedule their Series 65 exam.

      Series 63 and 65 | Difference

      •  Uniform Securities Agent State Law Exam is also known as the Series 63 exam; the Uniform Investment Adviser Law Exam is also known as the Series 65.  
      • The Series 63 license qualifies individuals to become Securities Agents, while the Series 65 license qualifies individuals as Investment Advisor Representatives (IARs).
      • The exam fee of the Series 63 exam is $147, that of the Series 65 exam is $187.
      • Series 63 exam passing rate is 43 of 60 questions (i.e., 72%), while that for the Series 65 exam is 94 of 130 questions (i.e., 72%). 
      • The duration of the Series 63 exam is 1 hour 15 minutes (75 minutes), while that of the Series 65 is 3 hours (180 minutes).
      • Series 63 exam has 65 multiple-choice questions with 5 pretest questions(the 5 pretest questions are not scored, only 60 questions are scored); the Series 65 contains 130 multiple-choice questions with 10 pretest questions.

      Relationship between Series 63, 65 and 66

      Series 63, 65, and 66 exams are all North American Securities Administrators Association (NASAA) introduced examinations. 

      Series 66 exam is the latest introduced exam of all the NASAA established exams.

      Requests from broker-dealers and other firms in the financial services sectors led to the introduction of the Series 66 exam.

      A combination of both Series 63 and Series 65 is Series 66.  

      In Conclusion

      This article has been intriguingly interesting in that we discussed, compared, and contrasted both Series 63 and Series 65. 

      Both Series 63 and 65 are exams introduced by NASAA and administered by FINRA. 

      The three NASAA examinations are Series 63, Series 65, and Series 66. 

      The series 66 is a combination of both Series 63 and 65. 

      Both Series 63 and Series 65 exams are NASAA introduced examinations. 

      Both exams also have no corequisite for getting the license.

      Anyone who wants to transact business as a securities agent should get the Series 63 license.

      The Series 65 license is required for individuals who want to become Investment Advisor Representatives (IARs).

      The comment section is at your disposer to ask questions relating to Series 63, Series 65, and other related topics. 

      We will give relevant answers and clarity to any issue raised in good time.

      Thanks for reading this article.

      We have other related articles that will interest you.

      Do well to browse through our websites for more information. 

      FAQs

      Sources

      FINRA

      Investopedia

      Kaplan

      NASAA

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