The Executive Suite: How to Start a Financial Brokerage Online

Sunday, September 22, 2013

How to Start a Financial Brokerage Online

An online brokerage firm is a registered broker-dealer that uses the Internet to process and execute trades for its customers. Unlike traditional brokerage firms that have stockbrokers taking customer orders over the phone, online brokerage firms buy and sell stocks, bonds and options through Web-based trading platforms. Online brokerage firms can charge less commission to the retail investor since the trade order does not involve the assistance of a stockbroker. Low overhead and minimal start-up costs make starting an online brokerage firm very appealing as a business opportunity.

Suggestions

Acquire licenses issued by the Financial Industry Regulatory Authority (FINRA) by taking the exams for a general securities representative (Series 7), uniform securities agent (Series 63) and general securities sales supervisor (Series 9 and 10). You may need to acquire other licenses required by FINRA, depending on what type of securities you will be trading.
Hire a securities attorney. Your attorney will be able to navigate you through all the licensing process and filing requirements necessary to obtain approval from FINRA and the state where you want to operate your online brokerage firm.
Partner with a major clearing firm to execute your trades. Clearing firms are members of major stock exchanges such as the New York Stock Exchange, American Stock Exchange and Nasdaq. Some clearing firms let their brokerage customers trade on their online platform in exchange for clearing trades.
Design a website that's compliant with all regulations. Have your attorney review the content and wording of your site before it goes live. When developing your site, consider speaking with your clearing firm to find out if it can integrate its trading platform into your site.
Hire a marketing firm that handles search engine optimization and has experience promoting online brokerage firms. Your marketer will provide various advertising sources and search engine tools that will help rank your online brokerage firm.
Recruit people to become licensed brokers. Once they pass the Series 7 exam, they should be an excellent source for generating new customers. Cold calling and other marketing strategies should be utilized for optimal results.