Series 57 vs Series 56

S

Scalperten

Hello, I recently started requesting information on trading through a prop firm. They told me I need a series 57 license and a capital contribution. The capital contribution is fine. Only problem I am having is the Series 57 license. I thought you needed a series 56. Anybody know about this? Did it just recently changed? I thought I needed the 56 not the 57. Is this something that recently changed? All my study materials are for the 56! I don't want to lose my capital contribution so I am a bit worried about this, any feedback with knowledge on this topic is greatly appreciated.
 
I have a similar question about licensure. Are there any requirements besides money to become a FINRA member firm? According to FINRA there is a $7,500-55,000 fee depending upon the size of your company. You need a FINRA member firm to sponsor you in order to take certain exams. If I want to side step that process, can I just pay the fee to become a member and sponsor myself?
Screen_Shot_2016_04_15_at_4_35_45_PM.png

Screen_Shot_2016_04_15_at_4_39_10_PM.png
 
hhiusa said:
I have a similar question about licensure. Are there any requirements besides money to become a FINRA member firm? According to FINRA there is a $7,500-55,000 fee depending upon the size of your company. You need a FINRA member firm to sponsor you in order to take certain exams. If I want to side step that process, can I just pay the fee to become a member and sponsor myself?
More...

It is a very time consuming expensive process that requires members of the firm that have experience with the items you are looking for a approval for. If you just want to trade, you don't need to be a broker dealer. If you want to start your own trading firm as a BD, you don't need to be a FINRA member. Most BDs that are FINRA members do it to do customer business. You most register as a SEC registered BD, then pick a self-regulatory organization (SRO) to regulate you.

I'm not sure what the benefit is because BDs have a heavy fixed expense and regulatory requirements, and you can get very good leverage with customer accounts with very little over head.
 
I understand what you are saying. I thought that you needed to have certain licenses to handle other people's money. I currently trade for myself, but people have asked me if I could manage their money. I told them that I did not think that I could. I had a meeting with someone who runs a Morgan Stanley branch by me and he offered to sponsored me, and offered me a job as an analyst, but I would have to work there. I do not want to work for anyone. Are you saying that I can handle people's money without any licenses? I am not doing it because I necessarily need the capital.
 
There are many ways to manage money. You have to check with your state's securities laws for exceptions. EG, in NY, you can manage up to 5 clients without registering as an Investment Adviser. I don't know enough about your situation and what you want to do, to advise you any further. If you join a firm like MS, you can run your own business and take advantage of their name and infrastructure. For most people this is a better way to get started. You can go out on your own in the future. At a firm like MS,you will need your Series 7 and 66. You will also want your insurance exam to sell annuities. At these firms, even though you are not self employed and have to do business by their rules, you will be running your own business.

Bob
 
BTW, I have many friends in this business that work for the big firms. I also have clients that run their own businesses with Separately Managed Accounts (SMA) as RIAs and also are looking to start hedge funds. To do this, you need a verifiable track record. To be an asset manager at a firm like MS, your goal is to bring in assets and meet your clients long term needs, not focus on short term trading profits.
 
  • Like
Reactions: kim
rmorse said:
BTW, I have many friends in this business that work for the big firms. I also have clients that run their own businesses with Separately Managed Accounts (SMA) as RIAs and also are looking to start hedge funds. To do this, you need a verifiable track record. To be an asset manager at a firm like MS, your goal is to bring in assets and meet your clients long term needs, not focus on short term trading profits.
More...

I wrapped my assets in a corporation for certain tax reasons. Concerning the meeting, he said if I could show him proof of concept, he would put me in charge of a fund, which does sound nice but quite stressful. The company is essentially a proof of concept vehicle to show a track record as you say.

To me, it seems like a contradiction in terms to say that you run your own company based upon somebody else's rules.

I am residing in California. Thank you for being prompt.
 
Scalperten said:
Hello, I recently started requesting information on trading through a prop firm. They told me I need a series 57 license and a capital contribution. The capital contribution is fine. Only problem I am having is the Series 57 license. I thought you needed a series 56. Anybody know about this? Did it just recently changed? I thought I needed the 56 not the 57. Is this something that recently changed? All my study materials are for the 56! I don't want to lose my capital contribution so I am a bit worried about this, any feedback with knowledge on this topic is greatly appreciated.
More...

They changed the rules from requiring the Series 56 to requiring the Series 57. The 57 replaces both the 56 and 55, which are now rolled into one exam/license. So if you want to trade with that particular prop firm you're requesting information from, you will need the 57. They will sponsor you for it once you fill out the U4 form and pass the background check.

You can read about the rule change here:

https://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-15-45.pdf

And here:

https://www.finra.org/sites/default/files/notice_doc_file_ref/Notice_Information-03.31.15.pdf
 
You must log in or register to reply here.
Back
Top