Uniform Securities Agent State Law (Series 63) Practice Exam 2026 - Free Series 63 Practice Questions and Study Guide

The key distinction between an agent and a broker-dealer lies in the relationship and function each has within the securities industry. An agent is an individual who performs trades on behalf of clients, typically employed by a broker-dealer firm. This means that agents do not act independently; they represent the broker-dealer and facilitate transactions for clients, earning commissions based on the trades they execute.

On the other hand, a broker-dealer is a firm or an individual that buys and sells securities for its own account or on behalf of its clients. Broker-dealers can operate independently and may engage in various transactional activities, including acting as market makers, providing investment advice, and holding client assets.

The other options, while involving aspects related to roles in the securities industry, do not define the primary characteristic that differentiate the two positions. For instance, trading for one's own account pertains to the role of a broker-dealer and does not apply to agents. Similarly, stating that a broker-dealer acts on behalf of clients captures part of their role, but it does not emphasize the employment relationship with agents, which is crucial to understanding the difference. Additionally, investing in real estate is not a defining activity of a broker-dealer, as their primary focus is on securities.