Steps to Starting up an Independent Broker Dealership


Steps to Starting up an Independent Broker Dealership


As some of you might know, starting a broker dealer firm implies, first and foremost, both a challenging and strenuous procedure. Depending on one’s expertise in terms of business ventures, everything involved with a broker dealer firm can be new information.

After all, opening such a firm is not as easy as getting your common convenience store started. There are licenses and memberships involved that you can’t miss if you want to operate as a fully legal enterprise.

For instance, a short look on this website showcasing the most popular brokers out there will make you see that there are quite a lot of things you need to take into account to be among the best broker dealers out there!


Consider Potential Expenses

Before diving straight into this particular venture, it’s important to consider the expected facts that you will certainly come across – as well as those that you might not even realize you have to deal with.

As such, one has to take into account their registration with FINRA (including registrations and memberships with state-owned institutions), consultancy fees, employee payouts and, last but not least, deposits to clearing firms. 

It also goes without saying that, given the nature of this business, unexpected expenses are extremely common.


Starting Capital

Obviously, a decent starting capital is a must for a broker dealer firm. But how much should one secure? Well, based on past public experiences, most entrepreneurs would say that one needs around $100,000 in starting capital.

However, for those that want their firm to actually trade on its own, so to speak, then another $50,000 should be added to the sum mentioned above.


Essential Employees

Needless to say, you might not possess all the experience that you need to open and then successfully manage a broker dealer firm. As such, you need some individuals that will help you out, namely principals.

Moreover, don’t think that you can do it without them. Such principals are required if you want to be approved by the SEC. In short, you’ll need one principal dealing with financial operations and two additional principals that are FINRA-registered.



Last but not least, before your broker dealership is granted a FINRA membership, you have to become a member of yet another organization. 

In this case, we refer to SRO – self-regulatory organization. Membership is required in order for your FINRA membership to be valid. But this is not the most important thing.

The vital thing, if we may say so, for your broker dealer firm, is the correct completion of your FINRA form. This particular form – which actually consists of multiple forms – enquires into things such as capital sources, details regarding the supervisory system, business plans, bank agreements, and so on.


The Bottom Line

As you can see, starting up an independent broker business means more than just running a platform and looking at trades being made. Way before the point of you even launching a website or an app, you have to go through many other things.

In the end, it all boils down to having memberships with various financial organizations – state-owned and other.