A newbie's question about series 7 requirement

Discussion in 'Prop Firms' started by ezbentley, Mar 1, 2009.

  1. Why do some prop trading firms not require their traders to take the series 7 exam?

    What's the difference and is there any advantage/disadvantage of trading for a prop firm that requires series 7 vs. does not require series 7?

    If you pass the series 7 exam, does you categorize you as a "professional trader" and you will have to pay higher exchange data fees even if you trade for yourself?
     
  2. Why do some prop trading firms not require their traders to take the series 7 exam?
    Ans: Prop firms that are members of an exchange have their traders registered S-7 due to exchange rules.

    What's the difference and is there any advantage/disadvantage of trading for a prop firm that requires series 7 vs. does not require series 7?
    Ans: Any advantage/disadvantage for a trader comes from the fees/payout from the prop firm and not from S-7.

    If you pass the series 7 exam, does you categorize you as a "professional trader" and you will have to pay higher exchange data fees even if you trade for yourself?
    Ans: No. Consideration for professional fees depends on your activity and not S-7.
     
  3. Hi Chartman,

    Thanks for the clarification.

    If I understand you correctly, if a firm is NOT a member of an exchange, then its traders do not have to pass series 7. Is that correct?

    If that's the case, what's the difference between a firm that IS a member of an exchange vs a firm that IS NOT a member of an exchange? Should the membership be taken into consideration when applying to prop firms?

    Thanks,
     
  4. If I understand you correctly, if a firm is NOT a member of an exchange, then its traders do not have to pass series 7. Is that correct?
    Ans: Correct



    If that's the case, what's the difference between a firm that IS a member of an exchange vs a firm that IS NOT a member of an exchange? Should the membership be taken into consideration when applying to prop firms?
    Ans:A member firm has the exchange as their SRO and must maintain certain net capital as well as abide by rules and regulations. Regardess of the exchange status of the prop firm, you will be a trader and have a sub-account with any prop firm and your funds, if any, will not be protected by SIPC with a prop firm.
     
  5. Hi chartman,

    Thanks for the response.

    If that's all the difference between a prop firm that is versus is not a member of an exchange, the exchange membership does not seem be to an important factor that a trader should consider when selecting a prop firm.
     
  6. if youre new to prop trading, as i am, id probably go with a firm that requires a series 7.

    with all the shady operations trying to scam people these days, i feel like a company that is SEC regulated, requires a series 7, and has to have a certain amount of cash on hand is a lot more legit. Can someone more in the know agree/disagree?
     
  7. NazSpaz

    NazSpaz

    2nd that. Series 7 firms are incredible peace of mind.

    Here is the best thread about the subject I have seen, the first few pages at least, this was all discussed in great detail after Tuco - a large firm (tons of traders from ET) that did not require a Series 7 - was raided and shut down by the SEC, freezing all the money and causing huge headaches for the traders there, thus this thread:

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=120523
     
  8. Be careful with LLC firms that do not require you to be licensed.