How to start a brokerage firm?

This is a discussion on How to start a brokerage firm? within the Brokerages forums, part of the Commercial category; Hi, This might sound a bit dumb but how does one start a brokerage firm? Remember I have no experience ...

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Old Nov 15, 2017, 3:46pm   #1
 
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How to start a brokerage firm?

Hi,

This might sound a bit dumb but how does one start a brokerage firm? Remember I have no experience at all and would appreciate all your inputs. Here are my assumptions.

- I will need to register a limited company
- I will need to run my accounts and tax etc.
- I will need certain exams or certificates
- Looking at advisory, execution only and discretionary services
- Probably stock broker maybe CFDs
- I will need some sales force to call on potential clients
- Client opens an account and credits his account with money
- I will need access to a trading platform like IG or CMC to make trade on behalf of the client
- I will need some web based client area to keep track on clients' account and keep them informed

Have a missed anything? Remember I'm now looking into general info and not exactly what certification do I need.

Any feedback would be highly appreciated.

Cheers
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Old Nov 15, 2017, 3:59pm   #2
Joined Sep 2017
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Originally Posted by martingrey View Post
Hi,

This might sound a bit dumb but how does one start a brokerage firm? Remember I have no experience at all and would appreciate all your inputs. Here are my assumptions.

- I will need to register a limited company
- I will need to run my accounts and tax etc.
- I will need certain exams or certificates
- Looking at advisory, execution only and discretionary services
- Probably stock broker maybe CFDs
- I will need some sales force to call on potential clients
- Client opens an account and credits his account with money
- I will need access to a trading platform like IG or CMC to make trade on behalf of the client
- I will need some web based client area to keep track on clients' account and keep them informed

Have a missed anything? Remember I'm now looking into general info and not exactly what certification do I need.

Any feedback would be highly appreciated.

Cheers
What about money?
Surely you'll need quite a substantial amount of money yourself...
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Old Nov 15, 2017, 4:23pm   #3
 
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Originally Posted by Nowler View Post
What about money?
Surely you'll need quite a substantial amount of money yourself...
Right I will need money. Read somewhere around 100k?

Also a proper website.

One thing I am trying to get my head around. In terms advisory, execution only and discretionary services, the client always deals with the broker, they never have access to the trading platform to execute the trades by themselves...correct? In other words, the brokerage acts on their behalf.

Also what CRM is recommended, or is it good enough to keep the records in a spreadsheet?
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Old Nov 15, 2017, 4:38pm   #4
Joined Sep 2017
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Originally Posted by martingrey View Post
Right I will need money. Read somewhere around 100k?

Also a proper website.

One thing I am trying to get my head around. In terms advisory, execution only and discretionary services, the client always deals with the broker, they never have access to the trading platform to execute the trades by themselves...correct? In other words, the brokerage acts on their behalf.

Also what CRM is recommended, or is it good enough to keep the records in a spreadsheet?
I wouldn't know any of this. I just noticed you never mentioned capital needed, which obviously would be a deal breaker if you didn't have it. You could look up the rules as per the regulator in your country..?
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Old Nov 15, 2017, 10:36pm   #5
FXX
Joined Oct 2017
You'll need millions. The fca license alone can cost up to 250k and you will need to have a lot of infrastructure in place and processes before you can even apply. Building a website and platform will cost up to a million if not more. The IT equipment and staff are also going to cost you. It's a pipe dream unless you have millions under your bed.
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Old Nov 23, 2017, 2:35pm   #6
 
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Originally Posted by FXX View Post
You'll need millions. The fca license alone can cost up to 250k and you will need to have a lot of infrastructure in place and processes before you can even apply. Building a website and platform will cost up to a million if not more. The IT equipment and staff are also going to cost you. It's a pipe dream unless you have millions under your bed.
Well thanks that's good to know.

In terms of the IT equipment, what do you need? I assumed, you can start off say with advisory CFDs, therefor you would buy a trading platform access with IG for instance and use spreadsheets and email to keep clients updated. Or is there any software like CRM recommended to manage clients?

Thanks
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Old Nov 23, 2017, 5:09pm   #7
Joined Feb 2002
If you're completely new to brokerage approach the firms who offer this as a franchise opportunity. Even if you don't go with one of them, you will pick up a whole lot of valuable business information for free.

See The Franchise Show, ExCel, in February.

Also, ask a bank to lend you the start-up money, even if you don't need it. If they wouldn't lend you the money, you're not ready. But their business advisors might be able to point you in the right direction
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Old Nov 23, 2017, 9:06pm   #8
 
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Originally Posted by martingrey View Post
use spreadsheets and email to keep clients updated
I think you are pulling our leg here...
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"If you don't find a way to make money while you sleep, you will work until you die." Warren Buffett, CEO of Berkshire Hathaway.

Count de Money number 1 trading rule: EDUCATE YOURSELF!

Before you trade even single penny on the stock market, please spend the time and educate yourself by back testing different trading strategies and ideas - go to eBay and search for "historical stock market data", you can buy 20 years of data for less than $100 - that's all you need to start.
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