The Series 6 and Series 63 licenses are documents granting the holder permission to engage in certain securities transactions such as selling shares in mutual funds. The Financial Industry Regulatory Authority – FINRA – is a nongovernment entity charged with regulating the financial industry. As part of this mission, the organization restricts who can trade securities professionally under a licensing regime. The Series 6 and Series 63 licenses are two examples of FINRA's approach, with the Series 63 serving as a complementary state-level license to the Series 6.
Series 6 License
The Series 6 licensing exam authorizes applicants to become investment company products/variable contracts limited representatives. This title allows them to sell specific packaged financial products such as mutual funds, insurance policies or variable annuities to clients. It does not, however, allow them to sell individual securities like specific stocks or bonds – only a Series 7 license allows that kind of sales activity. Similarly, a Series 6 license does not permit the holder to trade options. The licensing exam thus includes questions about securities packaging, taxation policy and marketing and sales regulations.
Series 6 Exam
The Series 6 exam lasts 135 minutes and features 105 multiple-choice questions on topics like mutual funds, variable annuities, and general ethics in the financial industry. Of the 105 questions, 100 count towards applicants' final scores while the extra 5 are experimental and do not count. Instead, FINRA uses results from those questions to design future versions of the test. A passing grade on the exam requires a minimum of 70 correct answers. To take the exam, applicants must be sponsored by an existing member firm of FINRA. Independent candidates are not eligible to apply.
Series 63 License
Like the Series 6 license, the Series 63 license was developed by the NASAA. However, the goal of this license is to help states approve candidates to operate as securities representatives within their own boundaries. Thus, while the Series 6 license exam covers federal regulations, the Series 63 covers state issues. As such, candidates never take the Series 63 test by itself – they always receive their Series 63 in conjunction with another license such as the Series 6. Most states require anyone testing for a Series 6 license to pass the Series 63 exam, too. However, the following states and territories waive that requirement: Colorado, the District of Columbia, Florida, Louisiana, Maryland, New Jersey, Puerto Rico, Ohio, and Vermont.
Series 63 Exam
The Series 63 exam lasts 75 minutes and includes 65 multiple-choice questions on state securities regulations. Of those questions, only 60 count towards the final grade, with the extra five questions serving as experimental questions. To pass, applicants must answer 43 of the 60 scored questions correctly. According to Investopedia, the Series 63 exam is notorious for including trick questions that blur the line between what the law allows and what the law requires. For example, a question might give a hypothetical conflict of interest and ask whether disclosure of the conflict to a client is required or is simply recommended.