Stock broker license requirements

Written by jared lewis
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Stock broker license requirements
Stock brokers advise clients of the best times to buy stocks, bonds and mutual funds. (stocks and shares image by Andrew Brown from

Becoming a stock broker can lead to a lucrative career in the financial services industry. As the U.S. Bureau of Labor Statistics has indicated, the median annual salary of sales representatives in the securities field was £44,642 as of May 2008; the middle 50 per cent of securities representatives earned between £26,312 and £79,475. The licensing requirements to become a stock broker are fairly stringent and require specialised knowledge of the securities field. Several months of preparation may be necessary.

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Series 7 Examination Requirements

In order to obtain licensing as a stock broker, you must first meet all requirements established by the Financial Industry Regulatory Authority. FINRA administers a series of examinations for all professionals in the financial services industry; the industry as a whole is regulated by FINRA and the Securities and Exchange Commission. In order to be eligible to sit for the licensing exam, the Series 7 examination, you must first be employed by the financial firm you will represent for four months prior to the examination. Some firms will hire you conditionally with the understanding that you will pass the examination at the end of your initial period of employment. Depending on the firm, you may or may not be compensated during this initial period; some firms will pay you to spend your time preparing for the examination. The Series 7 exam consists of two parts, each part composed of 125 multiple-choice questions. Examinees have three hours to complete each part and must score a 70 per cent or higher to pass the examination. The exam can cover all aspects of the securities industry including regulations and ethics.

State Registration Requirements

Most states require additional licensing examinations in addition to the exam administered by FINRA. These Uniform Securities Agents State Law Examinations are commonly known as the Series 63, 65 and Series 66 examinations. All of the exams cover state laws regarding investment advisement. The Series 66 exam is a combination of the Series 63 and 65 exams. Some states may require the 63 and 65, while other may simply require the 66, which has become an exam that largely supersedes the other two in most states. These examinations also cover a wide range of topics. As the Bureau of Labor Statistics notes, these topics can include anything ranging from record-keeping regulations to business conduct and ethical treatment of clients. If you have passed the Series 7 examination, most firms will provide you with the necessary training for the state exams.

Other Licensing Requirements

Because of the potentially damaging effect that unethical behaviour can have on the financial services industry and, more importantly, its clients, you will need to answer a series of personal questions when you register for your license. Hiring firms must have record of your past residential history, education and employment history before you can be hired and licensed as a stock broker. Furthermore, you will have to answer questions regarding your personal credit history and any blemishes you may have on your criminal record. A poor credit history or criminal record could prevent you from being hired and licensed as a securities representative.

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