Introduction

Welcome to Regulation of Broker-Dealers, the unit that covers how firms that buy and sell securities are defined, registered, and supervised under both federal and state law.

Exam Weight: Part of 45 questions

What You'll Learn

In this unit, you'll cover:

• Definition of a Broker-Dealer: What makes a firm a broker, a dealer, or both, and who is excluded
• Definition of an Underwriter: How securities reach the public market through firm commitment, best efforts, and all-or-none arrangements
• Market Makers and Associated Persons: The role of dealers who provide continuous liquidity and the people connected to broker-dealer firms
• Registration and Post-Registration Requirements: Dual registration at the federal and state level, plus ongoing books-and-records and customer confirmation obligations
• Broker-Dealer Agent Supervision: How firms must supervise their registered representatives through written procedures, inspections, and designated principals

Why This Matters

Broker-dealers sit at the center of the securities industry: they execute trades, underwrite new issues, and make markets. The exam tests whether you understand the regulatory framework that governs these firms:

• Who qualifies as a broker-dealer
• What registration obligations apply
• What ongoing compliance requirements they must meet

Because the Series 66 is a state law exam, expect questions that test the dual federal-and-state registration requirement and the distinction between a broker-dealer (firm) and an agent (individual).

Let's start with the definition of a broker-dealer and who is excluded from the definition.