What is the Series 53 Exam and License? - SmartAsset

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 required 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 maintain records of these activities. Subsequently, they could supervise the processing clearing and safekeeping of municipal securities. Finally, they may be responsible for the training principals or representatives at municipal securities brokers.

The Series 53 Exam

The Series 53 test is a 100-question, multiple-choice exam. Test-takers get 3 hours and 30 minutes to take it. However, a passing score requires answering 70% of all questions correctly.

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.

Certification Requirements

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 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 of reading the material and two to three weeks of practicing with the sample questions.

Similar Certifications

MSRB oversees some other licensing exams in the municipal securities field. The first, 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 manage 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 the selling and purchasing of 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.

Financial Tips

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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.