Intoducing Brokers

[Arny50]

Does Ohio law require that an Introducing Commodity Options broker be licensed with the State.

 

[ALawyer]

Too state specific, but in general, if you share commissions you better be licensed.

 

[Jeter]

What's an Introducing Commodities Broker? You're either a licensed Broker or not. It goes further than just commissions. Some people are paid to just cold call or open accounts for future trading.In some states you can't even contact a prospective client unless you're licensed. Check out this link. Go under the Securities Exchange Commission section on the right.

http://www.sec.gov

Jeter

 

[bigun]

An introducing broker {IB} solicts and opens accounts and another firm clears the trades and collects margin money. With commodity futures, the controlling authority is the CFTC and NFA. As far as registration, the firm whom the IB clears through has a compliance dept who makes certain all federal and state laws are followed.

 

[Jeter]

I stand corrected on the controlling authority, thank you.

My answer was a bit sarcastic because there are many names for an unlicensed individual who prospects for business in brokerage industry. We can call him an introducing broker for argument sake. First of all, the firm that this individual works for should have it's own compliance dept to regulate solicitation by appropriate individuals. The clearing corp can only assure that registered reps are compliant because they are on the books and the $$ for their trades goes through the clearing corp.

Most times the clearing house doesn't even know who is only opening accounts or prospecting because there is no trading involved. The IB is specifically an account opener until he/she is licensed. Time after time I have seen "IB's" paid directly by a senior (licensed)broker (tax writeoff)and the IB doesn't go on the company payroll until they are licensed. The clearinghouse does not keep tabs on this.

Your question is "does a person opening accounts or prospecting have to be registered with the state?" That is a concern because if a person is not registered, they cannot be monitored by a larger controlling authority. The firm can see to it that the individual is invisible until that individual can be licensed (That's when they can really become profitable). However, if the individual is caught in the act of doing something inappropriate, the firm will make sure that the person takes the fall, not the firm. That's the reason why I said you should look it up. If the firm isn't letting you know the answer to that question, they just may be practicing illegal procedure to take a shortcut. Make sure you cover yourself!!

Jeter