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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12684
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Do I need to take the series 7 exam or need asponsor become

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Do I need to take the series 7 exam or need a sponsor become a Commodities and Forex Broker? I'm interested in becoming an independent Commodities Broker or Forex Broker and to own my own Commodities and Forex company? What exams do I need to take to be a Commodites Broker and Forex Broker of my own company? Do I need sponsors for any of the exams? Also, do I need a Bachelors degree in Business? What is the start-up cost for a Commodities and Forex Broker company? What is the average revenue for Commodites and Forex Broker company? Also, do I need a Bachelors degree in Business?

The series 7 is the (FINRA) general securities exam for reps registered with a broker/dealer and you do need a sponsor for that, and you do not need a degree for that.

The typical stock broker (series 7) that sell stocks, bonds, funds, ETFs any security is the by far more common, and some folks hold both, but the typical series 7 licensed broker has to refer any commodities or futures business to a series 3 licnesed individual.

The series 3 exam is the all-encompassing test that is required by the National Futures Association (NFA) and the Commodities Futures Trading Commission (CFTC) in order to be considered a commodities and futures pro.

Hope this helps Good Luck!

Forex Brokers (although there are several registration entities within thst (introducing broker, Swap Dealer, Swap Participant, etc etc) are regulated by the Self Regulatory Body NFA, National Futures Association

Lane and 3 other Tax Specialists are ready to help you
Thanks for the feedback

And good luck!


Customer: replied 5 years ago.

I only have to take the series 3 exam for commodities broker? Do I have to legally become a stock broker first to become a commodities broker? What is the start-up cost for a commodities business and what may the revenue or sales be for a commodities business?

That's right.

If you're only going to deal with commodities, you will not need to take the S7 at all.

The sales are completely a function of your activity.

Commissions on trading commodities have come down considerably. In the 1990’s, many commodity brokers were charging in excess of $150 per round-turn. Since about 2005, full-service rates have typically ranged between $30 and $80. Remember, commission rates on futures contracts are paid per contract, not per order.

One thing you might want to consider, is registering as an investment adviser, where you're paid based on the amount of money in the account, rather than on the transaction .

That way, you're interests are aligned with the investor/client ... rather than simply being paid on every contract, regardless of you customers' success.

... Just a thought.


Lane and 3 other Tax Specialists are ready to help you
Customer: replied 4 years ago.

Is a financial planner (investment advisor) license required to start hedge fund manager business and investment club in Illinois?

Your licensing depends on the level of assets you manage.

Currently managers that have less than 100 million under management are regulated by their state securities division (Used to be 25 million. Looots of RIAs - all those managing between 25 and 100 million had to re-register at the state level).

AND some states have what's called a de minimus exemption for less than a certain number of clients.

Hang on and I'll check IL for you.


By the way, if you just set up as an officer of the investment club there's NO licensing required .... BUT if you are charging a fee FOR you investment advice, whether it's a hedge fund, investment club, 401(k) plan or individuals, you havde to register under the investment advisers act.

Hang on and I'll get the IL specific info for you

Here's the information for Illinois (looks like they haven't update the info to the change where the SEC pushed regulation of any advisory firm under 100mil to the states ...

But everything's there ... the forms, filing fees, etc.

If you do go the investment adviser route (which I would advise)... you'll have to develop and ADV (which is essentially your record with FINRA/SEC AND your brochure to the public regarding fees, services offered, etc.

Then you'll have to do a form called a U-4 which is where you disclose all of your personal information (as an advisory rep of your advisory firm).

And yes, as an advisory rep of your advisory firm you'll have to take, and pass, the series 65 test (uniform Investment Adviser Exam).

Once you jump through those hoops and become registered (and they've issued your CRD number, then you will initiate relationships with the institutional side of brokerages, trust companies banks to be the custodian(s) for your investment advisory clients.

Finally, I have two pieces of advice:

(1) Go this route. Doing it this way (rather than becoming a registered rep of a broker/dealer) you are truly representing your clients, rather than representing some broker/dealer (series 7) and working under a real conflict of interest, where you actually owe more allegiance to the B/D than to your clients.

(2) By doing it this way, that CRD number gives you access to all of the institutional shares out there. And DOES NOT (although some custodians tend to talk a lot like broker/dealers) create any allegiance to any specific broker, bank or trust company.

As a matte of fact, of you read the 1940 act (Registered Investment Advisers Act) you owe your client the due-diligence of finding a custodian that best fits their needs.

Some good ones:

TD Ameritrade Institutional
Schwab Institutional
Scottrade Investment Advisors division
Northern Trust
(for self directed IRAs Pensco trust is excellent)
Qualified plans ... Lincoln Trust
Fiedlity institutiional

and there are others

Let me know if you have questions


If not,positive Feedback (or an “Accept”) would be appreciated. That’s the ONLY way experts are paid!

However, if you need CLARIFICATION, please COME BACK here, AND feel free to bookmark.

As a follow-up here are the designations that will exempt you from having to take the series 65 in Il:

Waivers. The examination requirements shall not apply to any person who currently holds one of the following professional designations:

1) Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards, Inc.;

2) Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;

3) Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;

4) Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts;

5) Chartered Investment Counselor (CIC) awarded by the Investment Adviser Association; or

6) Any other professional designation as the Secretary of State may recognize by rule or by an order under Section 8 of the Act.

For example, I am a CFP, which exempted me from having to take the test in GA.

If you want a rigorous training in all of the areas; Investments, Tax, Estate, Insurance, Finance & Budgeting, Income tax then the CFP is the way to go...

But it you want to get there quickly, do the 65