Subordination Agreements

Generally, brokers and dealers use subordinated loans and notes collateralized by securities (referred to as subordinations) to borrow funds or securities from investors to increase their regulatory net capital. Pursuant to FINRA Rule 4110(e)(1), subordinations must be approved by FINRA in order to receive beneficial regulatory capital treatment. See Regulatory Notice 10-15 for more information, including details of FINRA's requirements for proposed subordinations.

 

Forms

Below are links to seven standard forms of agreements. Firms may, but are not required to, use these standard forms for proposed subordinations. A link to the Lender's Attestation is also below.

 

See the Types of Standard Forms (PDF 43 KB) table for a summary of the standard forms of subordination agreements and key characteristics of each form. Firms are encouraged to contact their assigned Regulatory Coordinator or Regulatory Specialist for questions about which forms they should or can use given their particular circumstances. See Regulatory Notice 10-15 for details.

 

Subordinated Loan Agreements

 

Secured Demand Note Collateral Agreements

 

Revolving Note and Cash Subordination Agreement

 

Lender's Attestation

 

Last Updated: 3/30/2010