Bridger PenningtonFund Launch & Investment Expert

Hedge Fund: Do I Need A License

3 Feb 2025 · 0 min

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Hedge funds don't always need individual licenses like the Series 7 because their prime broker can hold the registrations instead. The prime broker provides leverage, executes trades, and takes on the liability in exchange for a fee, shifting the licensing burden away from the fund.

People will ask me all the time, like, especially with hedge funds, do we need a Series 7 or a 33 or a 6 or all these different things? The answer is maybe, but oftentimes you don't need it. A prime broker will actually hold a lot of these licenses, allow you to get leverage and margin and all, whatever else you want to do with your trading. You go to the prime broker, they then help execute the trade, and then the trade comes back and flows through that prime broker. You pay them some fees, but they hold the licenses, they hold all the margin, all the liability.