The primary difference between the Series 7 and Series 63 licenses lies in their scope and the regulatory bodies that issue or oversee them: the Series 7 qualifies an individual to sell a wide range of securities nationally, while the Series 63 focuses on state-specific securities laws and is often required to sell securities within a particular state.
Core Distinctions Between Series 7 and 63
Both licenses are crucial for financial professionals, but they serve distinct purposes in the securities industry. Understanding their individual roles is key to comprehending their differences.
Series 7: The General Securities Representative Qualification
The Series 7 license, officially known as the General Securities Representative Qualification Examination, is issued by the Financial Industry Regulatory Authority (FINRA). It is a comprehensive examination that allows individuals to sell a broad spectrum of securities products to the public anywhere in the United States.
- Issuing Authority: FINRA
- Scope: National (United States)
- Primary Focus: Products and comprehensive knowledge of the securities industry.
- What it qualifies you to sell: Equities, corporate bonds, municipal bonds, options, investment company products (like mutual funds), variable annuities, direct participation programs, and more.
- Key Topics Covered: Investment risks, characteristics of various securities, client accounts, trading and market structure, suitability, and regulatory requirements.
Series 63: The Uniform Securities Agent State Law Exam
The Series 63 license, or the Uniform Securities Agent State Law Examination, is required by most states for individuals to sell securities within that specific state. It focuses on the state securities laws, commonly known as "Blue Sky Laws," which are designed to protect investors from fraud.
- Issuing Authority: North American Securities Administrators Association (NASAA), administered by FINRA.
- Scope: State-specific.
- Primary Focus: State securities laws, ethical practices, and fiduciary obligations.
- What it qualifies you to do: Register as a securities agent in a particular state, ensuring compliance with that state's regulations.
- Key Topics Covered: State securities acts, registration requirements for securities, agents, and investment advisers, prohibited practices, and ethical considerations.
Series 7 vs. Series 63: A Comparative Overview
To further clarify the distinctions, the table below highlights the key differences between these two essential licenses:
| Feature | Series 7 (General Securities Representative) | Series 63 (Uniform Securities Agent State Law) |
|---|---|---|
| Issuing Body | FINRA (Financial Industry Regulatory Authority) | NASAA (North American Securities Administrators Association) – administered by FINRA |
| Geographic Scope | National (Allows selling securities anywhere in the U.S.) | State-specific (Required by individual states to sell within their jurisdiction) |
| Primary Focus | Securities products, trading, markets, and federal securities regulations | State securities laws, ethical practices, and agent registration requirements |
| Content | Investment products, suitability, market mechanics, regulatory framework | Blue Sky Laws, prohibited activities, agent registration, administrative provisions |
| Purpose | Qualifies individuals to transact in a wide array of securities | Ensures compliance with specific state regulations and investor protection laws |
| Prerequisites | Generally, a sponsoring firm and the Securities Industry Essentials (SIE) Exam | No specific prerequisite exams, but often taken in conjunction with other product licenses |
Why Both Licenses Are Often Required
For many financial professionals, both the Series 7 and Series 63 licenses are necessary. While the Series 7 allows you to sell a diverse range of securities across the nation, the Series 63 ensures you comply with the specific "Blue Sky Laws" of any state where you conduct business. Think of the Series 7 as providing the authority to sell products, and the Series 63 as granting the legal permission to sell those products within a given state.
A registered representative typically needs the Series 7 to perform the functions of a general securities representative and the Series 63 to conduct business in the states where their clients reside. This combination ensures a comprehensive understanding of both federal product regulations and state-specific investor protection laws.
Who Needs These Licenses?
These licenses are essential for individuals aspiring to, or currently working in, various roles within the financial services industry, including:
- Stockbrokers: Individuals who buy and sell securities on behalf of clients.
- Investment Advisers: While often needing different licenses (like the Series 65 or 66), some may hold the Series 7 to transact securities directly.
- Financial Advisors/Planners: Professionals who advise clients on investment strategies and financial goals, often needing to execute trades.
- Sales Representatives for Broker-Dealers: Those involved in the sales and marketing of investment products.
