pt. is in old day you didn't need a series 7 to trade firm capital. your pt. is also correct my pt. was that disguisng small amount of capital contributions to get around around reg t requirements helped bring in series 7 requirement for prop. traders
nothing new when you bring in masses i.e. lower requirements you end up with regulation. e.g hedge funds etc.....
I do not believe this is accurately stated. Years ago, many firms hired traders who did not put up money and did not need a series 7. However, the reasons were different than way the above post implies.
In the early through mid (and a bit of the late) 90s, Trading SOES (Small Order Execution System) required that they (SOES traders), be customers and not employess (non professional).. Which meant you could NOT trade with a series 7 license.
As for the traders not putting up the money, in many cases that was true. Trading SOES was, for a while, a "game" that was won quite easily. So the firms would "lend" the traders a stake to trade. In essense, they were lending their customers money to "spend" at their firms. Which was later found to be a violation (not sure why....department stores lend thier customers money, and car companies lend their customers money, etc.), but the reality is the NASD did not like this practice. So away it went, some huge fines were paid, and SOES traders became "firm' traders. To trade a firms money you need a series 7. If you put up your own money, you can be a customer and trade without a 7. But then you are restricted to PDT rules. If you are in a partnership (like Carlin or Generic), whether or not you are required to deposit money is irrelevant to needing a series 7. You will. Even if you trade your "own money", with the leverage you get, you will be trading firm capital, and can't be considered a "customer".
As for someone else's question about the series 63, this generally only applies if you are either trading from locations in two different states, or, you are a broker and have customers in two or more different states. For a prop trader, I don't think it is necessary unless you travel from office to office in different states. Easy test if you need to take it though.
Continuing Ed. is a two year "refresher" program. Takes an hour or so. If you answer wrong, you are told why you are wrong, and I have never heard of anyone failing it.
To me, the surprise of this thread is I always believed Carlin Group was the CUSTOMER arm of the firm, and Generic the Prop arm. Guess I had it backwards, or they switched. But they have been the same company at least for the past 5 or 6 years that I am aware of, and probably longer. Strong company. But some questionable policies (IMO) regarding partnership structures (not a concern if you do not need to put up money).
No, I believe you are right. Technically the SOES traders were trading the seperate accounts of investors. Anyone can trade a limited number of accounts with discretion and not as a professional.
I may be wrong about SOES being for non - pros, but I am pretty sure that was the case.
In any event, when the shit hit the fan at some of the big firms, large fines were paid by the principals, SOES trading disappeared and the very same traders were required to become licensed (series 7) to trade. They never traded SOES again.
Now THIS is not a guess. This is exactly what happened.
No, I believe you are right. Technically the SOES traders were trading the seperate accounts of investors. Anyone can trade a limited number of accounts with discretion and not as a professional.
I may be wrong about SOES being for non - pros, but I am pretty sure that was the case.
In any event, when the shit hit the fan at some of the big firms, large fines were paid by the principals, SOES trading disappeared and the very same traders were required to become licensed (series 7) to trade. They never traded SOES again.
Now THIS is not a guess. This is exactly what happened.
Yes, this is probably part of the reason the large fines I mentioned were imposed. While I am not sure what the specific breakdown of violaations was that incurred these fines (trading firm capital, phantom "loans" etc.), I am positive about the magnitude of the fines. And about the elimination of SOESing in the situations I referred to.
There are no secrets about this. It is all public record. I guess if anyone was interested enough, they could find out all the details by going to NASDR.com and checking the big name trading firms and the principals involved. But its pretty dull and old news though.
RS