I am currently drafting a business plan for an online brokerage firm that fills a niche. Neither my partner nor I have any investment certifications or experience (we will hire the necessary people); however, from my research I see that in order to be a broker, you must have a Series 7 certification. My question is who within an online brokerage firm is required to hold such a certification, at the minimum?
1) Nobody since computers will be doing the investing and not people.
2) At least one of the principle founders/partners.
3) At least one of the hired executives or managers.
4) Anyone within the organization regardless of their position.
5) The company itself can acquire a Series 7 certification irrespective of the people within the organization.
Categorized | Affiliate Marketing 101
Who In An Online Brokerage Firm Startup Must Have A Series 7 Certification?
Posted on January 28, 2012.
There are legal requirements and then there are practical requirements.
The legal requirements are that anyone who gives out investing advice or deals with the public about investing must have their Series 7 (and be registered which includes a couple of other bookeeping things). The company cannot get a Series 7 certification because they are given out to people who go to a test center and take an exam.
On a practical note, you would be out of your mind to run a brokerage company without having at least the level of knowledge about securities that is required to pass the Series 7. You would make bad decision after bad decision and all those people you hired would be questioning your judgment all the time. If the poop ever hit the fan and you were not duly registered, opposing counsel would be delighted. Your business plan should include the two owners being registered persons with Series 7 exams passed.
The Series 7 exams are not hard exams. Honestly I studied for a grand total of 3 hours the morning I took the exam (and passed by a huge margin). If you don’t know almost all that stuff, you have no business owning a finance company.
So – 1) False 2) True 3) True 4) False (but in firms I have worked at, it was highly encouraged even for people just processing trades but surely not receptionists) 5) False.
Edit: Barney gave you a first-rate answer that is more complete than mine. Nice job, Barney!
Based on the wording of your question, you are miles away from getting into business and will have a long haul in front of you and your chances of getting there are slim to none.
In starting a brokerage firm, a series 7 should be the least of you concerns
There is no such registration as an”on-line” brokerage firm. You file as a registered broker/dealer, on-line is as service offered to the clients of the firm. Yes to be a stock broker you need a series 7 but not to be a broker/dealer. Anyone that deals with the general public as far as providing investment advice or taking or assisting with orders must be a Series 7
Depending on the business you’re doing and the markets you are using, you may need a FINOP, a registered general principal, and a Registered Option Principal,
You will need to register the firm with the Securities & Exchange Commission, and then apply for membership with FINRA. This is after you have your books and records audited by an outside accountant. You will also have to show that you have supervisory policies and procedures in place.
You will have to demonstrate how your will direct orders to the various markets and what firms you will use for such routing, or provide documentation that you are or are filing to become members of the appropriate exchanges.
You will need to show how you will clear your transaction either by providing you operational procedures & a customer reserve bank account or you will have to provide proof of your clearing agreement with another broker/dealer
You will have to provide documentation that you have the proper broker blanket bond insurance
Good luck on your journey, as an outside consultant I have establish numerous broker/dealers and you have a long ways to go if you are first addressing a Series 7 requirement
Both “Barney” & Joeyv” gave you a good response to you your questions.
If you are putting together a business plan for an “on-line” brokerage firm and are addressing Series 7 licenses you have absolutely no idea of what you are doing, nor how to do it.
“On-line” is a type of services provided it IS NOT a type of a brokerage firm, if you knew what you’re doing your would have known that.
I neither you nor your partner have any experience in the securities industry, there is no way you can be successful in your endeavors.
A Series 7 license is for an individual, not a firm. A company CAN NOT acquire a series 7
If you knew what you’re doing your would have known that.
Although there are several of us here on Y.A. have extensive securities industry experience, and if we had a question about the industry Y.A. is the last place we would go to for critical information, knowledgeable people would go directly to either to the SEC or FINRA, but then again we know what we are doing.