Can't trade because of FINRA regulations?
University student looking to get into algorithmic trading - wanted to just put in $100 or so and get a feel for it.
Just tried to set up an individual account with Robinhood (other brokers have too high minimum deposits) but I checked that box that said "I (or an immediate family member) is affiliated with a member of a stock exchange or FINRA body". My brother is currently working as a software engineer at a broker in NY, and apparently FINRA regulations prohibit me from trading on personal accounts? The email I got from Robinhood says I need a written approval letter from his firm's Compliance Department, but I don't want to go through all this trouble just to make a few trades for shits and giggles.
Has anyone experienced this scenario before? Is there anyway around it, besides having to stick to paper trading? Do other asset classes (derivatives, forex, etc) have these same regulations?
bump
If your brother is not in the same household as you, then you don't have to worry about this rule applying to you and you can mark "no" for that question. My spouse has to mark "yes" (obviously) for this rule. Also certain positions within the brokerage firm do not have to report external brokerage accounts, but all registered personnel do. At least that was my understanding of the rule. My mom, siblings, dad, etc. don't have to mark "yes" for affiliation because they don't live with me.
Well, it's a sticky situation. The issue here is that even though your brother is not in a "sensitive" role from what it sounds like, he works for a brokerage firm and therefore there is a fear of insider trading happening. This falls under a subset of Rule 3210/Rule 407/Rule 3050 regulations designed to prevent problems from happening. Say your brother finds out that Goldman is buying Evercore and mentions it to you - if you buy Evercore shares, then you have engaged in inside trading under the current rules and definitions. That's problematic for a number of reasons which I really don't want to get into. It really comes down to what kind of a role he has.
Realistically, it's 15 minutes of time to ask him to get a letter and have him explain to his compliance people that you're opening up a brokerage account. The worst thing that happens is that they ask to be listed as a non-controlling party of record (meaning they can see trade confirms, etc. and then check, based on his access, whether or not anything is fishy) just to ensure that there are no violations.
Unlike @"Original_Bankster, I would recommend marking yes just to play it safe if your brother has any of his licenses (Series 7, 63/66, etc.) or has access to sensitive information. IF he doesn't, then you should be fine with a no answer.
FINRA Rules ON Trading (Originally Posted: 04/08/2010)
Anyone know what the exact procedure is before starting an S&T SA at A BB, Specifically on how they handle your personal trading accounts. Do they require you to liquidate positions? Do they really check it diligently? Im not clear on what the FINRA regulations imply, I had a friend with an SA that traded his own account the whole summer somehow. Thanks
They don't really regulate it. It would be more pertinent if you were on the other side of the wall.
If you're registered (Series 7, 63, 55, etc) you'll have to submit a form to your personal brokerage that tells them to send a copy of all of your trade executions to the firm where you are registered. FINRA doesn't want you to be on one side of a trade in your professional account and the other side in your personal or other similar shenanigans. Your employer might also have their own independent policies that are more strict.
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