How To Start a Stockbroking Agency

A stock broker is a person who charges fees or a commission for investors who want to buy and sell investments. If you are wondering how to start a stock broking agency of your own, start by taking courses in business management. Then, follow these steps.

Step 1

Get some experience. Working in the stock industry isn't for everyone, especially if you aren't familiar with how it works. A lot of money is won and lost every day by stock brokers, and this directly impacts their clients (investors). You need to have experience working in the stock market before you even consider starting your own stock broking agency. You can do this by first starting out working for someone else's stock broking agency. You will have a much better chance of growing your client base if you can prove to them that you know what you're doing. This only comes with experience.

Step 2

Register as a broker. You will need to be a registered broker before you can start your stock broking agency. There are tests you will need to pass (series 7). Your other option would be to partner with someone who is already a broker and start a stock broking agency together.

Step 3

Decide if you will be a dealer as well. You can start a stock broking agency and remain just a broker. You would simply be selling and buying securities for your customers. But you can also be a broker and a dealer. A dealer owns the stocks that they sell, much like a car dealer owns the cars that he sells to his customers. It is quite popular for stock broking agencies to be run by broker/dealers.

Step 4

Register your stock broking agency. The government needs to recognize you as a business and so do the appropriate stock exchanges. Make sure you register with both of these, as well as the U.S. Securities Exchange Commission (SEC). There will be significant paperwork involved with this and some fees as well.

Step 5

Find a place to work from. Unless you're going to run this stock broker agency solo, you will need an office to house your employees. You can either rent or purchase the office, depending on your confidence level about how your new stock broking agency will fare. Along with this goes the hiring of agents to work at your stock broking agency. Again, go for well-experiencing, driven professionals to staff your new business.

Step 6

Invest in a trading platform. This will be the backbone of your business - your trading platform. This is the computer software that you and your employees will use to execute transactions on a daily basis. This manages all of your accounts and your business cannot run without this software. It is usually unique to each stock broking agency, so you will either need to create yourself (not recommended) or hire a skilled professional to create the perfect trading platform for you.  Be prepared for a significant investment for this software, as it usually comes with a maintenance package or troubleshooting helpline available to you.

Step 7

Find someone to clear through. You will need to find someone to clear through (like Morgan Stanley). They will work as a security for you, and insurance for your clients.

Step 8

Get started. Once you've got your stock broking agency set up and ready to roll, all you'll need to do is start developing your client base. You can contact previous clients and tell them about your new business venture. Or you can resort to cold-calling. Remember, the more clients you have, the more assets you'll be able to work with and the more potential revenue you can make.

Now you're on your way with your new business!  Just remember, the business climate is ever-changing; online coursework or degree programs in business can help you stay competitive.


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