Series 63

What it is:

The Series 63 (formally known as the Uniform Securities Agent State Law Exam) primarily covers a specific state's laws and ethical standards. Some states require brokers to obtain this license before soliciting clients and taking orders.

How it works/Example:

To obtain a Series 63 license, the applicant must pass the Series 63 exam. The National American Securities Administrators Association (NASAA) administers the test.

The exam consists of 65 multiple-choice questions and is 75-minutes long. Candidates must score at least 70% on the test to pass. Candidates can retake the exam after a prescribed waiting period.

In many states, a broker cannot legally advise clients, solicit transactions, and execute transactions for clients until he or she has passed the Series 63 exam and obtained the corresponding license.

Why it Matters:

black;">The Series 63 exam is an important step in ensuring that brokers are aware of state-level securities laws and the ethical standards expected of them. As such, this requirement benefits investors by requiring some level of uniform knowledge base among brokers.

Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to the investor rather than the agent.