How to Open a Stock Brokerage Firm

Register with appropriate regulatory authorities and organizations. Unless a broker intends to conduct business solely within a state, it must register with the Securities and Exchange Commission by filing Form BD, the Uniform Application for Broker-Dealer Registration. It is also required that a broker may not begin business until it has become a member of a self-regulated organization (SRO) such as a national securities exchange or FINRA, the Financial Industry Regulatory Authority. With few exceptions, a broker must also be a member of the SIPC, the Securities Investor Protection Corporation, which insures brokerage customers up to $500,000 in a broker liquidation.
Have partners, managers and employees registered with FINRA and arrange for them to pass their securities exams. In addition to a brokerage firm becoming a member of FINRA, its associated persons who effect securities transactions for the firm must also register with FINRA by filing Form U-4 through the firm. FINRA also sets qualification requirements for associated persons including passing a series of securities examinations. Among them, the comprehensive series 7 for corporate securities trading must be taken by anyone wishing to be a registered general securities representative.
Choose either to become an exchange member or sign an institution brokerage account agreement with another floor broker. Because there are only a limited number of seats from any stock exchange, new brokerage firms interested in becoming an exchange member have to either wait for a vacant seat to be for sale, or lease a seat from a current seat owner. Other firms may elect to conduct their brokerage business through a member broker. The New York Stock Exchange, for example, has 1366 floor brokers, including 7 designated specialists or market makers that non-member brokers can choose when routing their customers' orders.
Set up an infrastructure and platform for receiving and routing customer orders. These include purchasing computer servers, creating a website and choosing a stock trading software company for trading platform installation. All brokerage firms nowadays provide customers with access to online account management and online trading of securities. Depending on the intended size and complexity of the new brokerage firm, align your needs with the right version of trading software, full-fledged or scaled-down. Tech companies providing financial software offer such choices.

How to Buy Stock in Twitter

Check into the websites SharesPost.com and SecondMarket.com. These companies have recently emerged as private stock exchanges for members of private companies who want to sell some of their shares before going public. According to Fox News, 'These exchanges give stakeholders an alternative way to trade their shares in hot startups like Facebook for cold, hard cash --- without having to wait years for an IPO.' Some private companies give their employees shares in order to compensate for an initial inability to pay higher salaries. This option gives those employees a way to see some money more quickly (See References 1).
Do your research on the trends of this type of stock. Will Twitter continue to take off or is it a trend that will soon fade away? It's particularly important to carefully weigh your options if you're considering buying Twitter shares before they go public, since buying through private stock exchanges means buying whole blocks at once. Writer MHB for TheDomains.com explains, 'I'm talking about 60,000 shares at $31 a share comes to an almost $1.9 million dollar investment; no small amount of change.' In other words, if you want to buy stock in Twitter before it goes public, you should be confident in your investment (See References 2).
Register with one of the private stock exchanges. Once you create a profile, you'll be able to see how much other people have paid for shares of Twitter and other privately-owned stocks. Most of these companies also provide you with a report on the company and their current value. It's important to remember that you won't be able to sell your shares until the company goes public, which means you may be sitting on these shares for months or years, in which time the market may shift. 'You might therefore be buying restricted stock for the same price or less than free trading stock is selling for once the company goes public.On the other hand, if you find a hot startup, and get in early, you might make a huge pop down the line if you have the cash to tie up for a while,' says MHB of TheDomains.com. Since the investment is so big, it's important to discuss your decisions with financial advisors before moving forward with the purchase of a block of stocks (See References 2).