With the help of the well-known trading program Robinhood, users may buy and sell stocks, options, and cryptocurrencies without paying any commissions. But many people enquire as to whether Robinhood is a broker-dealer.
Yes, Robinhood is a broker-dealer, to answer your question. In order to purchase and sell stocks on behalf of their clients, they must have a license from the stocks and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
One must first acquire the proper licenses and registrations from the SEC and FINRA in order to work as an independent broker. Passing tests like the Series 7 and Series 63 as well as finishing a background check are required for this.
Everyone does not require a broker license. For instance, you might not require a license if all you’re doing is giving advise on securities—not purchasing or selling them. A license may not be required for some professionals, including accountants and lawyers.
The SEC and FINRA both regulate broker-dealers. Broker-dealers must abide by federal securities regulations, and the SEC is in charge of regulating the securities markets. Broker-dealers and their registered representatives are under the supervision of FINRA, a self-regulatory agency.
Charles Schwab is currently the biggest broker-dealer in the US. They oversee over 3.5 trillion dollars in client assets and over 10 million active brokerage accounts. TD Ameritrade, E*TRADE, and Fidelity are among further significant broker-dealers.
In conclusion, Robinhood is a broker-dealer and holds SEC and FINRA licenses. The relevant licenses and registrations from these regulatory organizations must first be obtained if you are interested in working as an independent broker. You might not require a license if all you’re doing is delivering stock market advice. The SEC and FINRA also regulate broker-dealers, with Charles Schwab now holding the title of largest broker-dealer in the United States.