Why is it the prop firms are not allowed to have foreign traders signing up from outside the U.S. and trading from outside the U.S. Is it a matter of series 7 and other licensing for some prop firms. What about those prop firms that do not require licensing.
In the US, the SEC is the boss of all SROs (aka Exchanges). Exchanges are the bosses of their Member firms (broker dealers). The largest SRO (Self Regulatory Organization) is FINRA, which covers all retail firms. (Finra can have prop as well.) Most prop firms are not set up as FINRA firms. The other SROs are the CBOE / CBSX, Chicago Stock Exchange (Bright is under them), Philadelphia Stock Exchange (which Nasdaq bought so is kind of like Finra) and maybe I've missed another one or two). But the SEC is under federal law. The exchanges / SROs have additional rules of their own. (Kind of like Federal Laws supersede State laws and they supersede city regulations.) You need to pay attention to federal law (eg no insider trading) but you also need to play by your SEC's rules (eg how to resolve disputes in the pits or what licenses are required for traders). So - CBOE does not want CBSX firms to have foreign traders for multiple reasons. 1) Foreigners are harder to regulate, especially since anti money laundering is a big issue since AML rules went into effect after 9/11. I mean this in the way that besides language and communication being issues, it may be tougher to verify government ID from Uzbekistan (or anywhere). 2) Foreigners are more EXPENSIVE to regulate. If they need to fly to Russia to check out a branch, that is going to cost a fortune. (Many exchanges are now public - like the CBOE, so need to watch costs...). Anyways, no regulated prop firm in the US as of the end of October can let you trade without licenses. Assume anyone who says you don't need a license after that date is an unregistered firm and you should steer clear...
I think I mentioned that we have traders around the world. Yes, they must follow the same licensing rules, whether in Amsteram or Albany, LOL. No big deal at this point. Don
sgt slotter. You are aware the traders that live overseas are Not required to conform to any rules for licensing whatsoever in having a trading account with any registered cbsx b/d. The rules do not apply to them as they do with usa based traders. From my understanding there are no changes that will affect that moving forward . Not sure what you heard? the cbsx exchange said there are no rules at the moment to change this Overseas traders will continue to get a free ride with being connected with cbsx b/d. without complying to any registration rules . status quo
Let me double check this ... you're saying that CBSX allows overseas traders with no S56 or S7, or any type of registration? Is that correct? Don
yes. overseas traders can trade with a cbsx b/d . They are exempt from the rules we have to follow at the moment. in the future that could change with some of these exchanges waiting for sec approval to accept 56 traders then maybe everyone will have to meet the same requirements. traders that hold no licenses & live overseas are not required to have to be licensed to trade. they may have a split deal with no capital required based on there track record by the same b/d that many usa traders are registered with currently. They keep the overseas traders a seperate entity. How or why it's allowed is a suprise considereing you would think everyone no matter where they live should have to follow the same rules to be in compliance with the exchange. overseas traders get a free pass to trade without following our current rules
hitnrun You obviously don't even know who you trade for. CBSX CAN NOT have overseas traders. Call the CBSX up. They have a website and phone # and everything. Tell the CBSX membership department what firm sends you your paycheck and ask the CBSX if that entity is a CBSX member. I am not sure it is even compliant that sub-group leaders can pitch overseas entities 'or consult' as someone else called it with another firm. What you trade for is some offshore company or a US retail account with foreign traders, which I know nothing about, but if you are not licensed with either a 7 or need to get a 56 or a waiver, it is not a US broker dealer. Where you are right is your rules aren't changing, because you're not really under any rules to begin with, for the time being, although US brokers (FINRA firms with overseas retail accounts or local retail accounts with foreign traders) who support this are getting cracked down on a bit. Who do you trade for? Someone on this board will know how it is set up and can enlighten you. I really don't know much about the overseas stuff, but I know enough about the US stuff to know you do not trade for an actual Prop BD. SGT
reid5525 Registered: Jan 2003 Posts: 636 09-26-11 05:29 PM If a guy is in Amsterdam how does he do the U.S. licensing test. You can take the S7 test in London. The only place in Europe one can take it. I do not know of Asia, Middle East, Australia etc..