To be a stockbroker, an individual must obtain the Series 7 and 63 licenses. Someone working for a securities company who has completed the requirements for the Series 7 and 63 licenses is known as a registered agent. Only registered reps are allows sell and take orders for investment securities.

Identification

The Financial Industry Regulatory Authority–FINRA–manages the testing, registration and compliance problems for individuals working in the financial securities industry. The Series 7 license is for a general securities representative, also known as a stockbroker or investment rep. The Series 63 registration is required in conjunction with the Series 7. Series 63 allows a registered agent to work in a specific state. An individual applying to be a stockbroker or investment agent will complete the Series 7 and 63 requirements at precisely the same time.

Function

The Series 6 and 63 conditions include being supervised by a monetary securities company, completing a background check and passing examinations for each of the licenses. Individuals are not allowed to take the examinations unless they are sponsored to FINRA with a securities company. Most the effort in becoming a registered agent entails studying for and passing the examinations. The Series 63 registration is managed by the North American Securities Administration Association–NASAA, but the testing is managed by FINRA.

Significance

The Series 7 examination consists of 250 questions, which should be performed in six hours. The test is split into two 125-question sections of three hours each, with a half-hour break between. The test covers investment securities, handling customer accounts and client monetary evaluation. The test requires detailed knowledge about stocks, bonds, options, mutual and closed-end funds and limited partnerships. The Series 63 exam include 65 questions, which should be performed in 1 hour and 15 minutes. The Series 63 covers the uniform state securities laws. The exam is the same for every state.

Considerations

Registered applicants should pass the Series 7 with a score of 70 percent or greater and the Series 63 with a score of 72 percent or greater. The tests are managed by FINRA and supplied daily at testing centres in many cities. Applicants take the tests on a specialized computer system, and get the results immediately upon completion of the test.

Potential

The Series 7 examination is extensive and hard. The Hedge Fund Career site reports that over 60,000 people take the test each year, and 67 percent pass. The average national score is 73 percent. Most applicants take classes or use a study guide before attempting the exam. The courses may be supplied or paid for by the sponsoring financial services firm. A person who fails the exam must wait 30 days before retaking the test.

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