Those who are interested in a career as a securities trader must take and pass the series 6 and 63 license exam. The series 6 license is the minimum requirement for brokers to sell annuities and mutual funds. The larger Wall Street banks require that all of their brokers a series 6 license at a minimum. However, the larger firms also require their brokers to hold the series 7 license in combination with the series 6. This license allows brokers to sell individual stocks along with mutual funds and variable annuities.
The series 63 exam tests an individual’s knowledge with relation to securities regulations, compliance issues, ethical business practices and how a brokerage operation is required to operate based on the rules set forth by the Securities and Exchange Commission. Most states in U.S. require bank employees to hold this license if they are selling any type of security. The license is used to demonstrate the employee’s competence when it comes to best business practices.
It is important to understand who is required to hold a license and who does not need a license. Individuals who wish to purchase securities through a brokerage house or online stock trading company are not required to hold any license. They may purchase equities however they see fit. The actual trader who executes the transaction is the person who is required to hold the license based on the type of transaction. If a customer is looking to purchase a large block of mutual fund shares, the trader who works for the brokerage house must hold a series 6 license. The same holds true for customers wishing to purchase individual stock, the trader who executes the transaction must hold a series 7 license. It is often times very confusing for individual investors who believe they need a license in order to execute a purchase. The fact is, individuals who are not employed by a broker/dealer do not need a license to execute trades.
One final note of very high importance, any individual wishing to obtain any type of license must be employed and sponsored by the brokerage house. Individuals cannot take the exams unless the company that they work for gives them a sponsorship. Therefore, individuals who are looking to obtain a license, but do not work for a registered broker are unable to take the exam. The National Association of Securities Dealers provides valuable information on the guidelines behind the series 6 and 63 license exam.
Individuals who would like to pursue a career as stockbrokers or security traders must pass the series 63 exam. The Financial Industry Regulatory Authority (FINRA) administers this examination on behalf of the North American Securities Administrators Association (NASAA). After successfully passing the examination, you are qualified to trade securities in all states. The examination consists of 65 multiple choice questions which must be completed within 75 minutes. Since January 2010, candidates must score at least 72 percent in order to pass the exam. It is important for candidates to prepare thoroughly before sitting for the exam. The following guide will take you through the most important series 63 exam prep steps.
There is no shortcut to success other than taking up a training course to prepare you for the exam. This will help you get to grips with the question and answer format that is used. Consider a candidate who has never taken the time to undergo extensive training. It is likely that such a person will not be able to answer the multiple choice questions within the given time. Remember, you have 75 minutes to answer 60 questions. A simple calculation reveals that you have an average of one minute and 15 seconds to clear each question. Taking too much time to answer a single question will cut down the time you have for other questions. Constant practice will help you perfect strategies for handling complex and difficult question structures. NASAA was set up to protect the public against securities fraud. It would be suicidal for a candidate to ignore this factor while preparing for the exam. A closer look will reveal that series 63 exam prep should consider the following categories seriously.
• Business practices. Includes questions on fraudulent activities which account for 35 percent of the exam.
• Registration of persons. This is important because 30 percent of the exam questions are based on this segment.
• Registration of securities. You cannot ignore this section as it accounts for 25 percent of all questions.
• Administrative provisions. 10 percent of the exam will be based on this topic.
Create a Study Plan
Many people get anxious and stressed as the exam nears. This will happen if you fail to create an effective study plan way before the exam. Your study plan should take into account how much you need to cover, available time, exam format, and performance target. There are various strategies that have been used with success over the years. It is advisable to create summary notes of all topics that you have covered so far. These will help you retain a lot of information as well as stick to the key terms and concepts. You can also make flashcards to be used in memorization. This is a further reduction of your summary notes and should include important keywords, concepts, formulas, and bullet points. Using flashcards will act as a memory trigger and enhance recalling information.
Do not neglect yourself during the series 63 exam prep period. Make sure that you rest well and take plenty of fluids. You can improve your chances of passing the exam by taking a training course from ABTrainingCenter.com.