How to become a Licenced Stockbroker
Stockbrokers, by definition, are responsible for the handling of investments for a wide range of individual and corporate clients, with the aim being to increase their rates of return. Theoretically, becoming a stockbroker per se in most countries does not require any formal educational qualifications. Nonetheless, it is likely that the majority of financial institutions considering hiring people for this role will expect some form of degree usually, but not necessarily, related to finance and business studies. However, to become recognised and be able to trade on stock exchanges, as well as offer financial advice, in most countries qualifications and licences are required, making the activities of stock-broking a regulated profession. Although these licences differ in terminology, the basic requirements are similar irrespective of the broker’s country of origin. This is particularly the case with the US and UK, which form the basis for the following discussion.
Licensed stockbroker in UK
In the UK, the qualification and licensing of stockbrokers falls within the control of theInstitute for Securities and Investments(CISI) for the former and the Financial Services (FSA), being the UK regulator, for the latter. The CISI examinations and qualifications take the form of a six stage process, successful completion of which takes the applicant from a foundation course to a post graduate level, where they will receive a diploma relevant to the area of employment within the financial services they have decided to pursue. There are four such areas available, which are wholesale, wealth/retail, operations and specialists.
To become a qualified and licensed UK stockbroker, one would focus upon development and completing the examinations within the wealth/retail and operations sectors, although the wholesale qualification would also prove useful in this respect. These examination qualifications are perquisites for achieving approval from the FSA regulator and a licence to trade as a fully-fledged stockbroker.
Licensed stockbroker in USA
It is important to first point out that, in the US, the more formal term given to a stockbroker by the regulatory authority is ‘representatives’. This term denotes that the stockbroker has been licensed to perform financial services by the US ‘Industry Regulatory Authority (FINRA)’.
As is the case with the UK and many other countries, to become a licensed stockbroker in the USA does require the completion of a selection of exams, as well as fulfilling other stipulations placed by the regulator upon those who wished to operate in the financial industry in this capacity. Concerning the number of examinations sat, these are dependent upon the area of financial activities and service the individual intends to undertake. The Series 7 exam for example, is considered appropriate for those who want to become involved with general securities. For those who wish to focus solely upon specific types of securities, it is possible to limit the type of exam series being sat. For example, the series 62 exam would prove ideal for those intending to offer only corporate securities. However, it is important for this type of registered stockbroker to remember that they cannot operate financial services outside of this remit, although it is possible to take the series 7 examinations at a later date.
Passing the examinations is of course the first step in the process. Once completed the next stage is to secure registration with FINRA and the Securities Commission. It is in this respect that becoming a licensed stockbroker in the US differs from countries such as the UK, because in the US there is a requirement to register at both Federal level and with each state where the stockbroker intends to conduct his or her financial services activities. The registration process includes submitting toand fingerprint cards. It is preferable, though not compulsory, for the applicant in such cases to be employed by a registered Investment Advisor firm.
Summary
As stated in the introduction to this article, licensed stockbroker requirements may differ between countries. However, it is clear from the discussion that becoming a licensed stockbroker, irrespective of ones country of domicile requires two stages to be completed. The first of these is completion of financial services industry specific education and qualification. The second is to become registered with the appropriate regulatory and stock exchange authorities. Providing the individual is of sound character and prepared to devote sufficient effort to the requisite education, there is nothing else that is likely to impede his or her pursuance of this career choice.
