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For example, to trade securities, sell insurance, or sell real estate you need to get a license. To get a license you need to take exams and pay money to be cer
by julespitt 13y ago
For example, to trade securities, sell insurance, or sell real estate you need to get a license. To get a license you need to take exams and pay money to be certified. Most people won't go through that effort and so the larger companies make a lot of money from the lack of competition.
My favorite example of mandatory entrenchment are the Series 6/7 exams for finance. I think the exams make perfect sense for licensure - but you aren't allowed to take the exam unless you are currently employed by a licensed broker. It's a legally enforced old boy's club.
- minimax 13y agoAre you saying it should be easier to start your own broker/dealer business? Or just that people ought to be able to take the series 7 without being sponsored in order to make themselves more hireable?
- julespitt 13y agoYeah, I'm just complaining about sponsorship. I don't remember there being much else in the way of what I consider to be superfluous barriers to entry.
- minimax 13y agoI agree that the sponsorship requirement to sit for the test is backwards, but if you are talking about barriers to entry for creating a new broker/dealer, the series 7 is a small inconvenience compared to everything else†. You have all the FinCEN stuff plus capital requirements as well as various recordkeeping, auditing and reporting requirements. It's a huge pain in the ass. †http://www.sec.gov/divisions/marketreg/bdguide.htm http://www.sec.gov/divisions/marketreg/bdguide.htm
- julespitt 13y agoYeah, they are a pain in the ass and could be improved greatly I'm sure. I'm just saying capital, record-keeping and AML requirements are not completely without a public-serving point, unlike the sponsorship requirement.
- eplumlee 13y agommmm barriers to entry. Collect that market power! I submit that anymore, about the only barriers to entry left in any industry are regulatory barriers to entry. Do you know how scarce cabby badges are in NYC?