Some firms require a Series 7 because of the exchange that they are registered with and perhaps even who they clear through. Different exchanges and clearing agents have different requirements, and therefore different risk profiles. If a firm is getting funded from a source that deals with the public, they may require that everybody who uses their money be registered.
Many good answers already. Retail brokerages who hire employees that handle client funds (Scottrade, Schwab, etc), will require a 7 plus other licenses depending on your relevant functions at the firm. States may also require specific licenses in addition to the 7. Currently, the props requiring a 7 are Echotrade, Bright Trading and HOLD Brothers, and perhaps others? Although you aren't handling "client funds" at these firms, their SRO (self regulatory organizations) require their traders to have a 7. If you conduct due diligence, then you'll notice that the firms requiring their traders to hold a 7 are much better capitalized than other prop firms that are registered with CBSX only. For example, according to the SEC.gov site database, Bright is probably the best capitalized among all the prop firms, with over $99 MILLION in total member's equity as of the end of 2008. Not sure about 2009, but damn, that's a lot of coin!
Ask yourself how many scam posts do you see on ET and out of the scam posts (ie Oliver Velez,etc..) how many of those required an S7 I do not recommend joining any prop firm that does not require a S7.
The S7 doesn't seem like the right test for prop traders, its geared towards retail customer related business. That's why the CBOE is coming out with their own test sometime over the next year. The bigger requirement especially if you are contributing any capital should be whether the firm is registered as a broker dealer.
Echo are ' investigating alternatives' for Series 7 req. What that means is unclear as of yet. They are also not withholding 20% profits and have no plans to do so. Above is from their Operations Manager as of last week Looks like they are diverging from the Bright/Golly model which is only positive for prop traders IMO
You can check for updated information regarding new regulations from the CBOE here: https://www.cboe.org/legal/default.aspx On October 1st, there was a notice regarding proposed changes within prop trading firms that have master/sub-accounts, however it does not mention anything regarding a new test. It's in RG10-10, found under the "Regulatory Circulars" link. If they announce a new test for traders who join a CBSX firm, then it will probably be listed on the above site.
This is a link to the proposal from the CBOE to the SEC. http://www.sec.gov/rules/sro/cboe/2010/34-62977.pdf