UNIFORM SECURITIES AGENT STATE LAW

EXAMINATION (SERIES 63) OVERVIEW

September 1, 2023

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 Table of Contents
1 BACKGROUND INFORMATION .........................................................................................3
1.1 Series 63 Examination Structure and Procedures .............................................................4
1.2 About NASAA and NASAA Model Acts, Model Rules and Statements of Policy .........5
2 SERIES 63 TEST SPECIFICATIONS ....................................................................................6
2.1 Regulation of Broker-Dealers ...........................................................................................7
2.2 Regulation of Broker-Dealer Agents.................................................................................7
2.3 Ethical Practices and Obligations......................................................................................7
2.4 Communication with Customers and Prospects ................................................................8
2.5 Regulations of Securities and Issuers ................................................................................8
2.6 Regulations of Investment Advisers .................................................................................8
2.7 Regulations of Investment Adviser Representatives .........................................................9
2.8 Remedies and Administrative Provisions .........................................................................9
3 CONSOLIDATED LIST OF TESTABLE SUBJECTS...........................................................9

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1 BACKGROUND INFORMATION
The Uniform Securities Agent State Law Examination, commonly called the “Series 63”
examination, has been developed by the North American Securities Administrators Association,
Inc. (“NASAA”) and NASAA’s member organizations in cooperation with securities industry
professionals to set standards of professional competency for broker-dealer agents under state
laws. Passage of the Series 63 examination is normally a prerequisite for licensure to conduct
business as a broker-dealer agent in a state.

The Series 63 examination evaluates an applicant’s knowledge of certain securities law

principles under federal and state law. These principles have been identified by subject matter
experts as appropriate metrics for successful professional service as a broker-dealer agent.
Broadly speaking, the questions in the Series 63 examination draw from the following sources:

Federal Law 1
• Securities Act of 1933 (“SA”)
• Securities Exchange Act of 1934 (“SEA”)
• Investment Advisers Act of 1940 (“IAA”)
• Securities and Exchange Commission (“SEC”) rules and regulations
• Financial Industry Regulatory Authority (“FINRA”) rules

State Law 2
• Uniform Securities Act of 1956, as amended by NASAA (“USA”) 3
• NASAA Model Rules, Statements of Policy and Model Acts

Applicants for the Series 63 examination are not expected to know the entirety of
information contained within these various sources. Rather, the Series 63 examination evaluates
a test taker’s knowledge of eight general subject matters relevant to the work of broker-dealer
agents. The test specifications for the Series 63 examination – i.e., the eight subject matters
tested in the examination and the respective weighting of each subject matter – are contained in
Part II below. Part II also identifies specific federal and state securities laws and rules that are

1
All federal law materials testable in the Series 63 examination are publicly available through various governmental
and non-governmental websites.
2
All state law materials testable in the Series 63 examination are publicly available on NASAA’s website.
3
A copy of this model act is available on NASAA’s website at: https://www.nasaa.org/wp-
content/uploads/2021/10/1956-Uniform-Securities-Act-with-NASAA-Updates-and-Commentary.pdf. The Uniform
Securities Act of 1956 was developed by the Uniform Law Commission. Since its original publication, NASAA has
added its own amendments and commentary to the 1956 Act. This version of the act – with NASAA’s amendments
and commentary – is the version eligible for testing in the Series 65 examination. (The Uniform Law Commission
subsequently developed a second model state securities statute, the Uniform Securities Act of 2002. However, the
Series 63 examination does not test this version.)

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eligible for testing in each subject. Finally, these testable laws and rules are consolidated into a
single list in Part III.

1.1 Series 63 Examination Structure and Procedures

The Series 63 examination consists of 65 multiple-choice questions. Of these questions,
60 will count towards an applicant’s final score while the remaining five are included for pre-
testing purposes (to validate and weight the questions for future scoring in NASAA
examinations). Applicants will not know which of the 65 questions in each examination will be
scored and which questions are included for pre-testing. Applicants are allowed 75 minutes to
complete the examination.

The Series 63 examination is a criterion based minimum competency examination,

meaning NASAA, through one of its committees and with assistance of independent subject
matter experts, is responsible for drafting and approving test questions and weighting the
composite examination. To pass the examination, a candidate must correctly answer at least 43
of the 60 scored questions.

Series 63 examinations are assembled individually by a test development algorithm from

a pool of eligible questions. Two individuals taking the Series 63 examination at the same time
therefore will have different sets of test questions. The test development algorithm uses difficulty
parameters and content parameters associated with the test questions to create each Series 63
examination. The use of these parameters ensures that all Series 63 examinations will be
consistent with one another from a content and difficulty perspective, notwithstanding that the
specific questions will vary.

All examination questions are copyright material of NASAA. NASAA expressly

prohibits the unauthorized use of the examination and examination questions. Accordingly, no
one may use, copy, reproduce or republish an examination or any examination question
without prior written consent from NASAA. NASAA reserves the right to take appropriate
action against any person who compromises or attempts to compromise the examination,
either in whole or in part, including referring such persons to state securities regulators
and law enforcement officials.

The Series 63 examination is conducted as a closed book test. Although not necessary,
scratch paper may be used by a candidate and will be provided by a testing proctor upon request.
(Scratch paper must be returned to the proctor after the test.) After completing the examination,
applicants will be notified whether they pass or fail the examination. Furthermore, any applicant
who fails the examination will be informed of their scores within each of the sections of the
examination (discussed below). No applicant will be told their score on specific questions, nor
will the text of any questions be disclosed.

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 Series 63 examinations are administered to test takers by FINRA. To schedule a
candidate for the examination, a broker-dealer should file an electronic Form U4 through the
WebCRD system (though an individual not employed by or associated with a FINRA member
firm can schedule their own examination by visiting FINRA’s Test Enrollment Services System).
Please visit FINRA’s “Enroll for an Exam” 4 webpage to learn more about registering to take the
examination. Once a candidate is registered, FINRA will open a 120-day testing window within
which the candidate must schedule and take their examination.

If an individual takes the Series 63 examination and does not pass, the following waiting
periods shall apply before the individual can retest:

(1) a minimum of 30 days after failing the first examination before the
second taking of the examination can be scheduled;

(2) a minimum of 30 days after failing the examination for the second
time before the third taking of the examination can be scheduled;
and

(3) a minimum of 180 days after failing the examination for a third
time before the fourth taking of the examination (and each
subsequent taking) can be scheduled.

Although successful completion of the examination may satisfy a portion of the

requirements for registration as a broker-dealer agent in a particular state, passing the Series 63
examination does not in and of itself confer the right to transact securities business in any
state. Test takers should refer to the specific licensing and registration requirements of each state
in which they seek to conduct business before endeavoring to do so to ensure they do not engage
in unlawful unregistered broker-dealer or investment adviser activity.

1.2 About NASAA and NASAA Model Acts, Model Rules and Statements of Policy
The Series 63 examination was developed by and through NASAA, and all examination
content is NASAA’s copyrighted property. NASAA is a non-profit association of state,
provincial and territorial securities regulators in the United States, Canada and Mexico.
NASAA’s U.S. members consist of the securities regulators in all fifty states, the District of
Columbia, Guam, Puerto Rico and the U.S. Virgin Islands. NASAA’s members have worked to
protect investors and regulate state securities markets for over 100 years.

One of NASAA’s missions is to develop model regulatory policies for potential adoption
by NASAA members or state legislatures. These documents, which NASAA terms model acts,

4
Publicly available at https://www.finra.org/registration-exams-ce/qualification-exams/enroll.

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model rules or statements of policy, 5 are intended for use by states to regulate particular issues of
state securities law. NASAA has a process by which it develops and adopts models and
statements (including providing opportunities for public comment). After NASAA adopts a
model act, model rule or statement of policy, each jurisdiction will decide for itself whether (and
how) to adopt the regulatory policy as its own.

NASAA’s model acts, model rules and statements of policy thus do not have legal force
or effect standing on their own. They are given legal force or effect through their adoption by
particular jurisdictions. All of NASAA’s model acts, model rules and statements of policy are
publicly available on NASAA’s website, www.nasaa.org, though not all of them are testable in
the Series 63 examination. The subject matters tested in the Series 63 examination (along with
the weighting of each subject matter) are outlined immediately below. Finally, Part III concludes
with a comprehensive list of all topics that are testable in the Series 63 examination.

2 SERIES 63 TEST SPECIFICATIONS

The Series 63 examination tests eight general subject matters related to the professional
responsibilities of broker-dealer agents. These subject matters are listed in the following table,
along with their respective weightings within the examination. 6

NUMBER OF
SUBJECT MATTER WEIGHTING
QUESTIONS
Regulation of Broker-Dealers 12% 7
Regulation of Broker-Dealer Agents 13% 8
Ethical Practices and Obligations 25% 15
Communication with Customers and Prospects 20% 12
Regulation of Securities and Issuers 9% 5
Regulation of Investment Advisers 5% 3
Regulation of Investment Adviser Representatives 5% 3
Remedies and Administrative Provisions 11% 7
TOTALS 100% 60*

5
There is no material distinction for non-NASAA members between a NASAA model act, a NASAA model rule
and a NASAA statement of policy.
6
Questions regarding the regulation of investment advisers and investment adviser representatives are included
within the scope of the Series 63 examination because of the close intersections between securities brokerage and
advisory services and the necessity for broker-dealer agents to understand the limits of permissible broker-dealer
agent activities.

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* As discussed previously, each Series 63 examination includes 65 questions of which 60 questions are scored. The five
unscored questions can come from any one or more of the above subject matters.

The sections below outline the purposes and scope of questions tested within these eight subject
matters, including examples of some of the statutes or rules eligible for testing. Candidates are
responsible for their own course of study to prepare for the examination. NASAA does not
approve, endorse or recommend any third-party examination preparation services. Third-party
examination preparation services have no access to examination content.

Finally, candidates should note that examination questions may or may not reference the
specific concept or legal rule being tested. For example, a question intended to test a candidate’s
knowledge of the NASAA Statement of Policy on Dishonest or Unethical Business Practices of
Broker-Dealers and Agents may or may not actually name this statement of policy as part of the
question. In addition, questions may refer generally to an area of law. A question that begins,
“Under the Uniform Securities Act . . .”, therefore might be testing the literal text of the Uniform
Securities Act of 1956 (as amended by NASAA) or it might be testing a NASAA model rule
promulgated thereunder. Similarly, a question that says “pursuant to the Securities Exchange Act
of 1934” could be testing the text of the statute or an SEC rule promulgated thereunder.
Candidates are expected to know the concepts and legal principles enumerated below without
necessarily being prompted as to which concept or principle is being tested.

2.1 Regulation of Broker-Dealers

Seven questions in every Series 63 examination (12%) will cover general regulatory
requirements affecting broker-dealers. These questions may test federal or state broker-dealer
registration requirements (e.g., SEA § 15; USA §§ 201 – 204, 401) and Form BD filing
requirements. Broker-dealer supervision standards also may be tested (e.g., FINRA Rule 3110).

2.2 Regulation of Broker-Dealer Agents

Eight questions in every Series 63 examination (13%) will cover general regulatory
requirements for broker-dealer agents. Test questions may include registration requirements for
broker-dealer agents (e.g., USA §§ 201 – 204, 401) and Form U4 filing requirements. In
addition, questions may test FINRA rules on agent accounts at other brokerage firms (e.g.,
FINRA Rule 3210) and payments to unregistered persons (e.g., FINRA Rule 2040).

2.3 Ethical Practices and Obligations

Fifteen questions in every Series 63 examination (25%) will cover broker-dealer business
conduct standards under federal and state law. Questions may address various types of fraudulent
broker-dealer conduct, such as churning, front-running, unauthorized trading, misrepresentations,
market manipulation, insider trading, and spoofing or layering. Federal conduct standards that
may be tested include SEC Regulation Best Interest, soft dollar standards (e.g., SEA § 28(e)) and
FINRA conduct rules (e.g., FINRA Rules 2111, 2121).

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 State conduct standards that may be tested include NASAA’s Statement of Policy on
Dishonest or Unethical Business Practices of Broker-Dealers and Agents, Statement of Policy on
Dishonest or Unethical Business Practices of Broker-Dealers and Agents In Connection with
Investment Company Shares, and Model Act to Protect Vulnerable Adults from Financial
Exploitation. In addition, the Uniform Prudent Investor Act prepared by the Uniform Law
Commission may be tested.

2.4 Communication with Customers and Prospects

Twelve questions in every Series 63 examination (20%) will cover regulatory
requirements for broker-dealer operations, records and communications with customers. NASAA
has not issued a model rule related to broker-dealer books and records (and federal law limits
state regulatory authority on this issue). However, questions in the Series 63 examination may
test SEC and FINRA rules related to broker-dealer books and records and communications with
customers (e.g., SEC Rules 17a-3, 17a-4; FINRA Rules 2210, 4512). In addition, questions about
options, including option valuation, and broker-dealer handling of margin accounts are eligible
for testing (e.g., Regulation T; FINRA Rules 2360, 4210). SEC Regulation S-P and state law
(e.g., USA § 403) also may be tested.

2.5 Regulations of Securities and Issuers

Five questions in every Series 63 examination (9%) will cover subjects related to issuers
and securities offerings. These questions may test general principles of securities registration and
exemptions, the securities offering process, and standards for securities underwriters. Specific
questions on securities registration and notice filing under state law may be asked (e.g., USA §§
301 – 307, 402). Questions also may test legal standards for whether a financial instrument is a
security under the well-known Howey test.

2.6 Regulations of Investment Advisers

Three questions in every Series 63 examination (5%) will cover general issues of
investment adviser regulation. Questions may include state law investment adviser registration
requirements (e.g., USA §§ 201 – 204), federal registration requirements (e.g., IAA § 203), and
the dividing line between state and federal regulation of investment advisers (e.g., IAA § 203A).
In addition, the following NASAA model rules may be tested: NASAA Unethical Business
Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered
Advisers Model Rule (102(a)(4)-1), NASAA Recordkeeping Requirements for Investment
Advisers Model Rule (203(a)-2), NASAA Contents of Investment Advisory Contract Model Rule
(502(c)), NASAA Custody Requirements for Investment Advisers Model Rule (102(e)(1)-1), and
the NASAA Investment Adviser Information and Security Privacy Rule.

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2.7 Regulations of Investment Adviser Representatives
Three questions in every Series 63 examination (5%) will cover general issues regarding
the regulation of investment adviser representatives. Questions may cover the definition of an
investment adviser representative (USA § 401), investment adviser representative registration
standards (e.g., USA §§ 201 – 204; SEC Rule 203A-1) and the NASAA Registration
Requirements for Investment Adviser Representatives Model Rule (202(a)-2).

2.8 Remedies and Administrative Provisions

Seven questions in every Series 63 examination (11%) will cover public and private
remedies available to redress violations of federal or state securities laws, the scope of insurance
coverage provided by the Securities Investor Protection Corporation (“SIPC”), and the
administrative powers of state securities administrators. In particular, questions of state law may
cover the scope of antifraud provisions (USA § 101), remedies available to state securities
administrators to regulate securities professionals (USA § 204) and securities offerings (USA §§
306, 307), the authority of state securities administrators to conduct investigations (USA § 407)
and issue orders (USA § 408), and potential civil (USA § 410) and criminal (USA § 409)
liability for securities violations.

3 CONSOLIDATED LIST OF TESTABLE SUBJECTS

Uniform Securities Act of 1956, as amended by NASAA 7

→ The entire text of this model act, including NASAA’s updates and commentary
thereon, is eligible for testing.

NASAA Model Rules, Statements of Policy and Model Acts

→ Statement of Policy on Dishonest or Unethical Business Practices of Broker-
Dealers and Agents (1983)
→ Statement of Policy on Dishonest or Unethical Business Practices of Broker-
Dealers and Agents in Connection with Investment Company Shares (1997)
→ NASAA Model Act to Protect Vulnerable Adults from Financial Exploitation
(2016)
→ Rules for Sales of Securities at Financial Institutions (1998)
→ Unethical Business Practices of Investment Advisers, Investment Adviser
Representatives, and Federal Covered Advisers, Model Rule 102(a)(4)-1 (2019)

7
A copy of this model act is available on NASAA’s website at: https://www.nasaa.org/wp-
content/uploads/2021/10/1956-Uniform-Securities-Act-with-NASAA-Updates-and-Commentary.pdf.

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 → Registration Requirements for Investment Adviser Representatives, Model Rule
202(a)-2 (2000)
→ Recordkeeping Requirements for Investment Advisers, Model Rule 203(a)-2
(2011)
→ Contents of Investment Advisory Contract, Model Rule 502(c) (2013)
→ Custody Requirements for Investment Advisers, Model Rule 102(e)(1)-1 (2013)
→ Investment Adviser Information and Security Privacy Rule (2019)

Securities Exchange Act of 1934 & SEC Rules Thereunder

→ Section 15 – Registration and Regulation of Brokers and Dealers
→ Section 28 – Effect on Existing Law
→ SEC Rule 17a-3 – Records to be Made by Certain Exchange Members, Brokers
and Dealers
→ SEC Rule 17a-4 – Records to be Preserved by Certain Exchange Members,
Brokers and Dealers
→ SEC Rule 15l-1 – Regulation Best Interest
→ SEC Regulation S-P
→ Form BD and Form BD Instructions
→ Form U-4 and Form U-4 Instructions

Securities Act of 1933 & SEC Rules Thereunder

→ Section 5 – Prohibitions Relating to Interstate Commerce and the Mails

Investment Advisers Act of 1940 & SEC Rules Thereunder

→ Section 203 – Registration of Investment Advisers
→ Section 203A – State and Federal Responsibilities
→ SEC Rule 203A-1 – Eligibility for SEC Registration; Switching to or From SEC
Registration

FINRA Rules and Regulatory Notices

→ FINRA Rule 2040 – Payments to Unregistered Persons
→ FINRA Rule 2111 – Suitability
→ FINRA Rule 2121 – Fair Prices and Commissions
→ FINRA Rule 2210 – Communications with the Public
→ FINRA Rule 2360 – Options
→ FINRA Rule 3110 – Supervision
→ FINRA Rule 3210 – Accounts At Other Broker-Dealers and Financial Institutions

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 → FINRA Rule 4210 – Margin Requirements
→ FINRA Rule 4512 – Customer Account Information
→ FINRA Regulatory Notice 10-22 – Regulation D Offerings

Other Subjects
→ Legal Standards for What Qualifies as a Security under the Howey Test (SEC v.
W.J. Howey, 328 U.S. 293 (1946))
→ Regulation T and Margin Trading
→ Uniform Prudent Investor Act
→ Use of Tombstone Ads in Securities Offerings
→ Options Valuation
→ Elements of Insider Trading
→ Scope of SIPC Insurance Coverage of Customer Accounts
→ Regulation of Wrap Fee Programs

Disclaimer: This document is intended to be an overview of the Uniform Securities Agent

State Law Examination, which will contain specific and challenging questions in these
subjects. Accordingly, this guide should not be considered a substitute for thorough study and
preparation.

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