How to Set up a Stock Trading Company

by Jackie Lohrey, studioD

Setting up a stock trading company requires both general and specific knowledge. Doing business on your own – sole trading – is similar in many respects to starting any small business. As a result, setting up your business begins with following legal requirements for your state and, if applicable, the area in which you live. Additional requirements, specific to a stock trading company, will also apply. No matter what your style of trading or business set-up, background knowledge, trading experience and a commitment to continuing education are essential prerequisites for setting up and running a successful stock trading company.

Establish the scope and range of services your stock trading company will initially provide. Since building a strong client base is essential to long-term success, consider offering services such as general personal finance and investment education, personal finance planning and investment advice in addition to stock trading services, at least until you succeed in building a reputation for stock trading that can attract new clients on its own. Once this happens, you can then decide whether to continue offering add-on services or focus solely on, for example, investment advice and stock trading.

Take and pass the appropriate Financial Industry Regulatory Authority – FINRA – and/or North American Securities Administrators Association – NASAA -- exam according to how you plan to run your business. If you plan to work as a broker or dealer and conduct stock trades on behalf of clients, take the FINRA Series 7 exam and the NASAA Series 63 exam. If you plan to work as an investment advisor only, take the NASAA Series 65 exam. Understand that if you plan to work as a broker or dealer, you will need corporate sponsorship via a Self Regulatory Organization or SRO before you can take the Series 7 exam. Get information on sponsorship specifics, exam prerequisites and preparation from the FINRA and NASAA websites.

Register with the Securities and Exchange Commission – SEC – and with the Securities Regulatory Agency for the state in which you live. Because the process is lengthy and can be confusing, consider getting assistance in completing this step from an attorney familiar with securities laws. The SEC provides registration information on its website. You can get contact information pertaining to your state from the NASAA website.

Assess and calculate start-up revenue requirements. If you cannot fund your stock trading company sufficiently using your own financial resources, look for outside investors willing to fund a portion of your start-up costs.

Analyze the advantages and disadvantages of conducting stock trades by setting up a professional trading account with an established company such as Forex versus setting up a direct access account that eliminates the “middleman.” Although using an intermediary means incurring additional fees, the assistance they provide can be vital to a new stock trading business. As your client base and industry knowledge grow, switching to a direct access account can reduce trading fees and, ultimately, increase your profit margin.


  • Find free information on setting up a small business from the U.S. Small Business Administration. The SBA provides information ranging from general start-up advice and writing a business plan to helping you identify legal requirements that pertain to you and the area in which you live. Also, consider contacting and working with representatives from the SCORE Association, a group of volunteers who provide free advice and assistance to new business start-ups.

About the Author

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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