# How to Start a Brokerage Firm: US Broker-Dealer Steps

> To start a US brokerage firm you form a company, register with the SEC on Form BD, join FINRA through a New Membership Application that FINRA must process within 180 days, join SIPC, register in each state, and staff qualified principals. Net capital minimums run from USD 5,000 for firms that never touch customer money to USD 250,000 for firms that carry accounts. Most new firms clear through another broker.

- Source: https://pipvalley.com/guides/how-to-start-a-brokerage-firm
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-12

**Short answer:** To start a US brokerage firm you form a company, register with the SEC on Form BD, join FINRA through a New Membership Application that FINRA must process within 180 days, join SIPC, register in each state, and staff qualified principals. Net capital minimums run from USD 5,000 for firms that never touch customer money to USD 250,000 for firms that carry accounts. Most new firms clear through another broker.

"Brokerage firm" in the US usually means a securities broker-dealer: a firm that buys and sells stocks, options or other securities for customers. It is one of the most regulated routes into trading, and very different from an evaluation prop firm, which sells simulated challenges and holds no customer accounts. This guide sets out the US broker-dealer route step by step, with the regulator's own figures checked on 12 October 2026.

If you are weighing routes, our guide on [how to start your own trading firm](/guides/how-to-start-a-trading-firm) compares four of them, [how to start a forex brokerage](/guides/how-to-start-a-forex-brokerage) covers currency and CFD brokers, and [how to start a prop firm](/guides/how-to-start-a-prop-firm) covers the evaluation model.

> This guide explains how things generally work and what we have seen running prop firms. It isn't legal, tax or financial advice, and it doesn't create a lawyer–client relationship. Rules differ by country and change often, so speak to a qualified lawyer (and a tax adviser) in the jurisdiction concerned before you act.

## What registrations does a US brokerage need?

Four layers, filed in roughly this order. The SEC's Guide to Broker-Dealer Registration says a firm registers on Form BD through FINRA's Central Registration Depository, "must become a member of FINRA, unless it qualifies for the exemption in Rule 15b9-1", and that "every registered broker-dealer must be a member of the Securities Investor Protection Corporation". It adds that "every state has its own requirements". The SEC charges no Form BD fee and must grant registration or begin denial proceedings within 45 days of a complete application.

- SEC: Form BD via the CRD system.
- FINRA: New Membership Application (Form NMA) and supporting documents that meet the Standards for Admission in Rule 1014.
- SIPC: membership for every registered broker-dealer.
- States: registration in each state where you do business.
- People: Form U4 for each associated person, and the qualification exams for their roles.

## How long does FINRA take, and what does it cost?

FINRA says it "must review and process" a New Membership Application "within 180 calendar days". Staff first check that the application is substantially complete, then assess it against 14 standards, hold a mandatory membership interview, and decide to grant, grant with restrictions or deny. In practice the clock starts only when the file is complete, so prepare the written supervisory procedures, business plan and financials before you file.

FINRA's application fee depends on the number of registered persons. The schedule below is from Section 4 of Schedule A to FINRA's By-Laws; FINRA adds USD 5,000 if the firm will clear and carry accounts.

**FINRA new member application fees by registered persons (FINRA By-Laws Schedule A, Section 4(e); checked 12 October 2026)**

| Firm size | Registered persons | Fee |
|---|---|---|
| Small, tier 1 | 1–10 | USD 7,500 |
| Small, tier 2 | 11–100 | USD 12,500 |
| Small, tier 3 | 101–150 | USD 20,000 |
| Medium | 151–300 / 301–500 | USD 25,000 / 30,000 |
| Large | 501–1,000 / 1,001–5,000 / over 5,000 | USD 35,000 / 45,000 / 55,000 |
| Clearing and carrying add-on | Any | Plus USD 5,000 |

## How much net capital does a brokerage firm need?

It depends on what the firm touches. SEC Rule 15c3-1 sets minimum net capital by business model. A firm that never receives or holds customer funds or securities can start at USD 5,000; a firm that carries customer accounts needs at least USD 250,000. Net capital is not a fee: it must be in the firm and computed under the rule at all times.

- Fidelity bond: FINRA Rule 4360 requires cover of the greater of 120% of required net capital or USD 100,000 for firms with a net capital requirement under USD 250,000.
- SIPC: protects customers up to USD 500,000, including a USD 250,000 limit for cash, per SIPC.

**Minimum net capital under SEC Rule 15c3-1(a)(2) (Cornell LII text; checked 12 October 2026)**

| Business model | Minimum |
|---|---|
| Carries customer or broker-dealer accounts | USD 250,000 |
| Dealer, or exempt firm under (k)(2)(i) | USD 100,000 |
| Introducing firm that receives but does not hold customer securities (fully disclosed) | USD 50,000 |
| Deals only in redeemable fund shares | USD 25,000 |
| Does not receive, hold or owe customer funds or securities | USD 5,000 |

## Who do you need to hire or qualify?

Registered representatives and principals must pass FINRA exams before working in those roles; FINRA says "an individual must pass the exams prior to engaging in those areas of the business". The common set for a small general securities firm is the Securities Industry Essentials (SIE, USD 100 in exam fees), the Series 7 representative exam (USD 395), the Series 24 principal exam (USD 235) and the Series 27 financial and operations principal exam (USD 235), per FINRA's exam pages.

Most new firms also sign a fully disclosed clearing agreement with an established clearing broker, which holds customer accounts and settles trades. That keeps the new firm in a lower net capital tier and out of custody, at the cost of the clearing firm's fees and minimums.

## What has changed recently for retail brokerages?

The pattern day trader rule. On 14 April 2026 the SEC approved FINRA's proposal to "eliminate provisions relating to 'pattern day traders'... and the minimum equity requirement of $25,000 for pattern day traders", replacing them with intraday margin standards. FINRA's rulebook shows the amendment effective 4 June 2026, with an optional phase-in for firms that need more time, so check how your clearing firm applies it. This matters to stock prop firms too; see the [stocks launch page](/start-a-prop-firm/stocks).

## Is a brokerage the right business for a trading founder?

Only if you want customer accounts and can carry the compliance team that comes with them. A broker-dealer needs supervisory procedures, books and records, anti-money-laundering controls, net capital computations and audits from day one. Many trading founders instead start an evaluation prop firm, which holds no customer money, or become an [introducing broker](/guides/how-to-become-an-introducing-broker) for futures. Compare budgets with our [launch cost calculator](/tools/prop-firm-launch-cost-calculator) and the [budget page](/start-a-prop-firm/budget).

A brokerage website also carries more rules: FINRA communications rules, BrokerCheck links and SIPC disclosures. PipValley builds websites for prop firms and the trading businesses next to them; see [websites for hedge funds and trading firms](/for/hedge-funds-and-trading-firms). We have not yet built a broker-dealer site for a client and say so up front.

## Questions

### How much does it cost to start a brokerage firm?

Regulatory costs start with FINRA's application fee (USD 7,500 for a firm with up to 10 registered persons) and net capital from USD 5,000 to 250,000 by model, plus exams, a fidelity bond, state fees, lawyers, compliance staff and clearing costs, which usually exceed the fees.

### How long does it take to start a broker-dealer?

FINRA must process a substantially complete New Membership Application within 180 calendar days, and the SEC acts on Form BD within 45 days. Preparing a complete application and hiring qualified principals adds months before you file.

### Do I need a Series 7 to own a brokerage firm?

Owners who are not involved in the securities business may not need exams, but the firm must have registered principals and representatives who have passed the required exams, such as the Series 24 for principals and Series 27 for financial and operations principals. Ask a securities lawyer about your role.

### Can a prop firm become a broker-dealer?

It can, but it becomes a different business with customer accounts and FINRA supervision. Most evaluation firms stay unlicensed or partner with a broker. In futures, some US prop groups have registered introducing brokers instead.

### Is the $25,000 pattern day trader rule gone?

The SEC approved FINRA's replacement of the pattern day trader provisions with intraday margin standards on 14 April 2026, effective 4 June 2026 with a phase-in option. Check how your clearing firm applies it.

## Sources

- [SEC: Guide to Broker-Dealer Registration](https://www.sec.gov/about/reports-publications/divisionsmarketregbdguidehtm)
- [FINRA: After you apply (new member applications)](https://www.finra.org/registration-exams-ce/broker-dealers/new-firms/after-you-apply)
- [FINRA: Register a new broker-dealer firm](https://www.finra.org/registration-exams-ce/broker-dealers/new-firms)
- [FINRA By-Laws Schedule A, Section 4: Fees](https://www.finra.org/rules-guidance/rulebooks/corporate-organization/section-4-fees)
- [FINRA: Qualification exams](https://www.finra.org/registration-exams-ce/qualification-exams)
- [17 CFR 240.15c3-1: Net capital requirements for brokers or dealers (Cornell LII)](https://www.law.cornell.edu/cfr/text/17/240.15c3-1)
- [FINRA Rule 4360: Fidelity bonds](https://www.finra.org/rules-guidance/rulebooks/finra-rules/4360)
- [SIPC: Our mission](https://www.sipc.org/about-sipc/sipc-mission)
- [SEC order approving SR-FINRA-2025-017 (Rule 4210 intraday margin, 14 Apr 2026)](https://www.finra.org/sites/default/files/2026-04/SR-FINRA-2025-017-91-FR-20731.pdf)
- [FINRA Rule 4210: Margin requirements](https://www.finra.org/rules-guidance/rulebooks/finra-rules/4210)