An investment professional who supervises municipal securities trading for a securities firm or bank dealer needs a Series 53 license. The Series 53 exam, also called the Municipal Securities Principal Qualification Examination, evaluates the knowledge and expertise of a municipal securities principal. Read on to learn more
Series 53 at a Glance
The Series 53 exam is the Municipal Securities Rulemaking Board (MSRB) exam trequired to get a Series 53 license. The MSRB is a self-regulatory organization that sets rules for municipal securities dealers and municipal advisors. As a result, develops and maintains the Series 53 test. Consequently, it adds and removes questions as rules change.
The Financial Industry Regulatory Authority (FINRA) is a government-authorized self-regulatory not-for-profit organization that oversees U.S. broker-dealers. Therefore, it licenses securities industry professionals, including those in the municipal securities business.
Who Gets A Series 53 License?
A municipal securities principal may manage and oversee underwriting, trading, buying and selling municipal securities. Meanwhile, a principal may give financial advice to entities that issue municipal securities issuers. As a result, these principals have primary responsibility for overseeing the municipal securities activities of a securities firm or bank dealer.
Series 53 license holders are likely to oversee communications with customers about and maintaining records of these activities. Subsequently, they could supervise processing clearing, and safekeeping of municipal securities. Finally, they may be responsible for training of principals or representatives at municipal securities brokers.
The Series 53 Exam
The questions are distributed among six primary topics in this manner:
- Federal regulations: 4%
- General supervision: 23%
- Sales supervision: 25%
- Origination and syndication: 23%
- Trading: 10%
- Operations: 15%
To schedule an exam, test-takers have to be sponsored by a FINRA firm. However, the test costs $265.
A Series 53 exam applicant must be sponsored by a FINRA firm. They also must pass the Securities Industry Essentials (SIE) and Series 52 exams.
The Series 52 license and exam are also overseen by MSRB. This license is required to qualify as a municipal securities representative. As a result, a municipal securities representative can underwrite and trade municipal securities.
The SIE exam and license are overseen by FINRA. This test assesses basic knowledge about securities products, risks, industry structure and function, regulatory agencies, and knowledge of prohibited practices.
Studying for the Series 53
MSRB doesn’t require any pre-licensing education for the Series 53. However, it provides an outline of the course content with headers briefly describing subjects students need to know in order to pass the test.
The 19-page course content outline divides into six sections. Topics include federal regulations, general supervision, sales supervision, origination and syndication, trading and operations. But rather than providing the detailed knowledge required to pass, it refers students to various online resources.
Those resources belong to government agencies and self-regulatory organizations. Consequently, they include websites of the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, FINRA, the MSRB and the Securities and Exchange Commission.
A number of private companies also provide Series 53 exam study materials and courses. Study guides cost approximately $130. Meanwhile, courses cost from $250 to $400 depending on features.
Students should spend four to six weeks studying for the test. However, this includes two to three weeks reading the material and two to three weeks practicing with the sample questions.
MSRB oversees some other licensing exams in the municipal securities field. The first, the Series 52, is a prerequisite for taking the Series 53 exam.
The Series 51 Municipal Securities Limited Principal exam is another MSRB test. If you want to directly manages municipal securities dealers and associated persons, you must have a Series 51.
The Series 7 license is a FINRA license for those who buy and sell municipal securities for customers of brokerages. It has its own, separate exams and qualifications.
A Series 6 license is another FINRA license for investment professionals who sell mutual funds, variable annuities and insurance. However, this license also authorizes selling and purchasing municipal fund securities.
The Bottom Line
You must have a Series 53 before you can oversee the municipal securities activities of a brokerage or other financial institution. But earning one requires passing the Series 53 exam that tests knowledge about supervising the underwriting, trading, buying and selling of municipal securities.
- If you’re thinking about adding municipal securities to your portfolio, consider consulting a financial advisor first. Finding the right financial advisor that fits your needs doesn’t have to be hard. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you want to meet local advisors who can help you achieve your financial goals, start now.
- Before considering municipal securities, you may want to figure out how much investment risk you can take. How fast does your investment need to grow? How much will taxes and inflation take out of it? SmartAsset’s investing guide can help answer some of those initial questions.
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