Introduction
First, welcome to the world of state security laws and regulations! If you’ve followed the path of most test takers, this is likely your last securities licensing exam. If you’ve taken the SIE, Series 6, 7, 79, or other combination of exams, you’ve already learned a great deal about the finance industry. The knowledge you’ve gained will help you on some Series 63 topics, but the topics covered in this material will likely feel like a completely new set of information. If this is the first licensing exam you’ve studied for, that’s fine too!
What this exam covers
The Series 63 is very focused on laws and regulations, particularly at the state level. You probably know at least a little about the SEC and FINRA, which are regulators focused on national regulation. This exam switches its focus to the state level, where you’ll learn plenty about state administrators and the Uniform Securities Act.
In fact, let’s start there. The Uniform Securities Act*, often referred to as the USA or blue sky laws**, is a model legislation that is adopted by the states. Meaning, it’s a framework of laws and regulations that states can adopt and implement to properly regulate the securities industry. This makes it easier for financial firms and professionals to comply with state securities laws. Otherwise, each state would create and enact its own regulations, which could vary significantly from state to state. A financial firm operating in multiple states would have to comply with each state’s rules if the USA didn’t exist, making compliance very difficult or near impossible.
*The majority of this material is based on the USA. There have been multiple versions of this legislation, but two are primarily utilized by the states. These are the Uniform Securities Act of 1956 and the Uniform Securities Act of 2002. While both are similar, there are slight differences that are generally unimportant for the exam. If you want to see the actual laws, click the previous links. If you’re not a fan of reading lengthy legislation, don’t worry! We read, analyzed, and summarized the important testable parts in this learning program.
**State securities laws were originally referred to as “blue sky laws.” It was said that certain advisors and brokers would go so far as “sell the blue sky” as they were attempting to take advantage of unknowing investors.
State laws and regulations created and enacted under the USA are similar from state to state. They cover a wide range of issues, including:
- Registration requirements for professionals
- Rules and regulations for professionals
- Registration of securities
- Rules and regulations for issuers
- Enforcement of anti-fraud laws
- Legal jurisdiction
- Ethical duties and fiduciary obligations
- Communications with investors
These laws and regulations are enforced by the state administrator. Think of them like the SEC, but at the state level. Although it sounds like a human being, the administrator is an office of people that work together to enforce the USA. In the real world, we use different terminology than the legal terms you’ll have to learn for this exam. For example, the state of California refers to its state administrator as The Department of Financial Protection and Innovation.
What’s the exam structure?
The Series 63 is a timed multiple-choice exam structured similarly to FINRA exams. You’ll be provided a 65-question exam with 5 “experimental” test questions, resulting in 60 graded questions. You must score a 72% (43 correct answers out of 60 questions) in 75 minutes or less in order to pass. Similar to FINRA’s SIE exam, you do not need to be sponsored by a financial firm to sit for the exam. After paying a $147 test fee, anyone can sit for the exam. You can learn more about the exam by following this link.
What’s the exam breakdown?
The North American Securities Administrators Association (NASAA), which represents all the state administrators as a single group, provides a fairly straightforward outline on their website. Here’s a quick summary of what to expect on the exam:
| Topic | # of test questions |
|---|---|
| Regulation of Investment Advisers | 3 (5%) |
| Regulation of IARs | 3 (5%) |
| Regulation of Broker-dealers | 7 (12%) |
| Regulation of Agents | 8 (13%) |
| Regulation of Securities and Issuers | 5 (9%) |
| Regulation of Administrative Provisions | 7 (11%) |
| Communications | 12 (20%) |
| Ethical Practices and Obligations | 15 (25%) |
| Total | 60 |
Each of these topics will be covered accordingly through the Achievable materials, and our practice exams are weighted according to NASAA’s outline.
Final thoughts before diving in
This exam is heavily focused on securities laws, and at times will feel like you’re studying for the bar. Legal concepts are sometimes difficult to understand, nitpicky, and vague. Much of this material will feel difficult to grasp at first, but you’ll get the hang of it if you stay diligent with your studies and composed. As always, the Achievable platform will learn your strengths and weaknesses while providing you with a customized review plan while you make your way through the reading.
Be sure to do your reviews consistently; they will provide you with practice questions that will test your knowledge of the test material. While reading is absolutely critical to your success, the practice questions are even more important with the Series 63. We expect you to see plenty of scenario-based questions that will require you to correctly apply securities laws and regulations. It’s one thing to know the law, but implementation is a whole different game. You’ll likely see many scenarios on the actual exam that aren’t so cut-and-dry, and you’ll be properly prepared if you see enough practice questions in our system. Good news - you have access to over 2,000 practice questions using the Achievable system!
Last, don’t be too concerned with remembering the topics you’ll study in this exam for your real-world job. The average test taker will utilize very few Series 63 test topics in their career. In fact, you’ll probably forget 90% of these concepts a month or two after your exam. That’s okay! Whether NASAA or FINRA wants to admit it, these exams are testing your ability to build knowledge on fairly difficult concepts. You won’t be expected to be an expert on securities laws as soon as you pass.
Your company will keep you informed on the securities laws and regulations that are applicable to your job. And many times, the real-world application of these laws will feel different than the way they’re presented on the exam. Bottom line - learn what you need to know for the exam, pass the exam, and move on with your life!
With that being said, let’s get started!