How to Become a Stockbroker

Are you thinking of becoming a stockbroker?

What are the things you need to do before becoming one?

Cynthia White

Cynthia White

Professional Business Writer | Former New York Stockbroker

I used to be a stockbroker in New York City in the 1980s. The licensing rules have changed somewhat over the years, and here’s what’s required (and not required) today.

A stockbroker must have a bachelor’s degree related to business or finance

You don’t technically need a specific degree, but it’s a competitive market, so, most people have at least a Bachelor’s degree in something related to business or finance.

Eventually, those who want to climb high on the corporate ladder get an MBA. So, basically, you need to already have a job working for a brokerage firm before you take any exams.

A stockbroker must pass certain exams

SIE (Securities Industry Essentials) exam and the Series 7

In some cases, if you have already taken the #7, you can get credit for the SIE. You have to be sponsored to take the Series 7 exam and sponsored by a brokerage firm that is a member of the governing organization, FINRA.

This exam is for buying and selling securities, although there’s a different exam required for bonds if you want to do that. That’s the exam #53. You don’t have to be sponsored to take the SIE exam.

FINRA has a long list of exams that are available depending on your specialty

There are different exams, for example, if you want to be a research analyst (#86 and #87).

You have to take an exam that qualifies you to register with the state

That’s exam #63 or #66. Those exams qualify you for most states, but there are a few exceptions. These exams cover relevant state law and some fiduciary responsibility.

All the exams are tough and most are at least a few hours. The exams all cost money, but hopefully, your employer will pay for them. You can retake the exams if needed.

The exams and requirements change on an ongoing basis, and there were significant changes after the Sarbanes Oxley Act in 2002. So, be sure to read up on what’s required for your state.

Exams typically have to be taken in a certain order. Requirements to be a broker in Canada are different and more arduous and complex. Assuming you take and pass all the required exams, there are all kinds of things you have to do to keep your registration current.

A stockbroker must submit fingerprints and pass the background check

The SEC requires you to be fingerprinted (they did in the 1980s too), and some sponsoring companies also require a background check. Fingerprints go to the U.S. Attorney General’s Office.

Joe Bailey

Joe Bailey

Business Development Consultant, My Trading Skills

A stockbroker must:

  • Attain an MBA or at the very least, a four-year degree in Economics, BA, or Finance.
  • Pursue a sponsorship with broker-dealer firms, which will register you with the SEC.
  • After registration, enroll for the Securities Representative Exam. The firm that has hired you can pay for this test, or you can choose to pay for yourself to demonstrate your determination.
  • Once you are successful with all the examinations, the hiring firm should provide you with on-the-job training, after which you become a qualified stockbroker.

Bottom Line: To become a stockbroker, you will need to have a business-related degree or MBA, you will need to find a broker-dealer firm to sponsor you as well as register you with the SEC, and you need to pass all of the required exams after your registration.

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