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January 23, 2014, 07:18:28 AM |
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There's an another option: get licensed as a broker/dealer with the SEC. Every broker in the US does that. Then you can deal in any tradeable security or commodity. There are exams, financial requirements, insurance, and audits. Each customer gets $500,000 in insurance against broker fraud and theft from the SIPC. (They paid off Madoff's customers up to that limit, for example.) Brokers pay the premium for this.
The SEC also licenses exchanges. I once asked Tradehill if they had SEC licensing. They disappeared shortly thereafter.
There are big advantages to being a licensed broker/dealer. Banks will deal with you at the wholesale level. You can get connected to ACH and even SWIFT and do your own wire transfers.
Yes, there are crooked brokers, and FINRA is there to go after them. FINRA fines brokers several hundred million dollars a year on average.
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