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bulllives

Registered: Jul 2008
Posts: 51

10-18-12 01:45 AM

when it is registered SEC and CBOE Stock Exchange (CBSX) Member?

Or are you a broker dealer when you are registered with FINRA?

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1245

Registered: May 2012
Posts: 510

10-18-12 01:52 AM

Not all prop firms are broker dealers. Some are structured like hedge funds. The prop firms that are broker dealers do it for many reasons. The ones your probably asking about do it for leverage and to mark up commissions. If you charge commissions you must be a broker dealer.

Every Broker dealer is registered with the SEC. Then they must choose a self-regulatory organization (SRO). The SRO can be an exchange or FINRA.

That institution is the regulatory body that the BD is "watched" by and the BD agrees to their rules and regulations. FINRA is typically the most difficult to deal with so BDs only choose FINRA when they have to.

1245

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bulllives

Registered: Jul 2008
Posts: 51

10-18-12 02:03 AM

So it's best to use a FINRA broker dealer? Versus the other because they are not "watched" or "examined"

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1245

Registered: May 2012
Posts: 510

10-18-12 02:21 AM

Quote from bulllives:

So it's best to use a FINRA broker dealer? Versus the other because they are not "watched" or "examined"

No. FINRA is a regulatory body. They are more difficult to be regulated by than the CBOE.

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dealmaker

Registered: Dec 2006
Posts: 607

05-05-13 09:10 PM

Quote from 1245:

No. FINRA is a regulatory body. They are more difficult to be regulated by than the CBOE.

Then why would some prop firms choose to be regulated by an exchange and FINRA i.e. what would force them to do this?

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1245

Registered: May 2012
Posts: 510

05-05-13 09:45 PM

Quote from dealmaker:

Then why would some prop firms choose to be regulated by an exchange and FINRA i.e. what would force them to do this?

Every Broker dealer must join an SRO- Self regulatory Body. They choose the one that fits their business model.

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