Stockbroker is the term commonly used for licensed securities sales professionals known as broker-dealer agents or registered representatives. In Kentucky, registered reps are licensed by the Kentucky Department of Financial Institutions Securities Division.
Before you can be licensed through the Kentucky Securities Division, a broker-dealer firm must sponsor you. After you become sponsored, your broker-dealer firm will help you to register through the Financial Industry Regulatory Authority (FINRA) Central Registration Depository (CRD). Once your registration with FINRA is accepted, you will be licensed in Kentucky to sell securities for commission as a representative of your sponsoring firm. Follow these steps to become a stockbroker in Kentucky.
Step 1. Get Your Education
- Get an appropriate degree. According to U.S. Bureau of Labor Statistics, most registered representatives have a four-year degree even though this is not a formal requirement for registration.
Degrees sought by registered reps are related to finance business, and accounting:
- BA-Consumer and Family Financial Services
- BS-Business Administration- Finance
- Managerial and corporate finance
- Micro and macro economics
- Financial planning and/or forecasting
- Markets and financial institutions
- Financial accounting
- Strategy and Risk management
- Quantitative methods
Step 2: Take the Required Exams to Become Licensed in Kentucky
- Find a sponsoring firm. As a registered representative, your securities license is tied to your sponsoring broker-dealer firm. You can contact the firm you would like to work with or apply for an open registered representative position.
- Complete the exam application form U-4, Uniform Application for Securities Registration or Transfer. Your sponsoring firm will then submit the form through the Central Registration Depository (CRD).
- Kentucky’s $50 initial registration fee is paid through the CRD
- The $85 FINRA registration fee is paid through the CRD
- Exam fees and FINRA registration fees are paid through the CRD
- Fingerprinting for an FBI criminal background check is required
- Authorization to obtain your credit report must be granted
- The series 7 exam covers securities laws, rules and regulations, ethics, and knowledge on specific investment products
- The $265 Series 7 Exam fee is paid through the CRD
- The fees to take these exams are $96 and $128 respectively paid through the CRD
- You have a 120-day window to take the exam once you have registered
- Schedule to take the exams at the Kentucky Prometric Testing Center or Pearson Professional Center nearest you
- Series 63 or 66 cannot be scheduled to be taken the same day as the Series 7 exam
Step 3: Receive Your On-The-Job Training
Your sponsoring firm will provide valuable sales, ethics, regulatory, and investment product training to equip you with the information required to sell securities. This training would include methods for building a clientele and making recommendations for various investment instruments, such as:
- Government securities
- Equity and debt securities
- Mutual funds
- Stocks and stock options
- Municipal and treasury bonds
- Variable contracts
- Other appropriate investment products
Step 4: Ongoing Requirements for License Renewal and Continuing Education
- Annual License Renewal and Fees
Your licenses are renewed through the CRD system. A fee of $50 is distributed to the Kentucky Department of Financial Institutions Securities Division.
- Continuing Education Requirements
The Securities Industry Continuing Education Program is a two-element program that all registered representatives must comply with:
- The Firm Element
The firm element is developed and delivered by each individual. Your employer provides this training yearly to keep you current on products they carry and the risk factors related to each product so you can make recommendations appropriate to client preferences and suitability.
Any regulatory requirements for the practices, services and products offered by the firm would also be covered.
- The Regulatory Element
This element requires you to participate in a computer based training session within 4 months (120 days) of your second registration. After that, this training is required every 3 years. Unlike the firm element, this covers broad subject areas such as compliance, ethical standards, sales practices and regulations that apply to all registered representatives. There might be slight variation based on the self-regulatory organization involved, but this element is still applicable to all.
The S101 General Program is required of all Series 7 professionals. It is comprised of 4 modules that you can go through in any order you’d like:
- Communicating with the Public
- New and Secondary Offering & Corporate Finance
- Handling Customer Accounts/Trade and Settlement Practices
- Client/Product Suitability
- The Firm Element
- Updating your Form U-4
As a registered representative, you need to update your form U-4 whenever there are changes to be made. You can do this by communicating the following changes promptly to your manager or compliance department:
- Change of physical address
- Unfavorable civil, financial or criminal judgments
- Any pending or completed disciplinary actions against you
- Customer complaints
- Transfer of Broker-Dealer
Since your registration is tied to your employer firm, if you change firms, you have to file another U-4 requesting transfer to your new employer. The fee for this transfer in Kentucky is $50.
Due to the nature of your work, this information is part of public records that your clients can readily access through FINRA’s BrokerCheck webpage.