What to Expect After You Apply as a New Broker-Dealer Firm
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After receiving a BD membership application through the Firm Gateway, FINRA must review and process it within 180 calendar days.
Here’s how the process works.
1. FINRA Conducts Preliminary Review of the Application
Once the filing is submitted FINRA’s staff will assess the application to determine if it is substantially complete. An application is considered substantially complete if it provides sufficient information allowing the staff to conduct a meaningful review. To the extent the application is found to be substantially incomplete, the applicant will be given five days to correct the deficiency.
- If the filing is deemed substantially complete, FINRA staff then has 30 days to complete its review and determine whether more information is needed. If additional information is required, FINRA staff must issue a written request within this timeframe.
- The applicant then will have 60 calendar days to fully respond to FINRA’s initial request. Keep in mind, in order to keep the matter moving efficiently, we recommend you respond as soon as possible and not take the entire 60 days. Please note: All subsequent requests and/or responses follow a 30-day timeframe.
Once deemed complete, the application is also assessed to determine if the filing is a potential candidate for Fast-Track Review, evaluating, among other things, the risk, complexity, regulatory significance, completeness, scale and scope of the matter. Note: For any matter deemed eligible for Fast-Track review, the firm must agree in writing to abbreviated turnaround times for responding to staff’s requests for information.
2. FINRA Evaluates Applicant Against our Standards for Admission
Each applicant for FINRA membership will be assessed in accordance with the 14 Standards for Admission contained in Membership and Registration Rule 1014.
3. FINRA May Require Amendments to an Application
Occasionally, applicants may need to amend Form BD and/or the relevant supporting documentation after filing their initial membership application. Importantly, information in Form BD and the membership application must be kept current. However, keep in mind that amendments to an application may in fact delay the time for FINRA to make a decision. If substantial changes are made to an application, you may be asked to withdraw your current application and refile, which may cause you to incur additional fees. Given this, it is important that you have evaluated the business plan and are ready to start up at the time of filing.
4. FINRA Interviews the Applicant
All applicants for membership are required to attend a Membership Interview conducted by FINRA staff.Membership interviews provide an opportunity for applicants to demonstrate how they meet the Standards for Admission to operate a prospective member firm. The focus of FINRA staff inquiries and the majority of discussions during the interview will typically relate to an applicant’s ability to meet the Standards for Admission set forth in NASD Rule 1014.
5. FINRA Issues a Decision
In issuing its decision, FINRA considers the application, the membership interview and other information, as well as the protection of investors. FINRA then will decide whether membership is granted, granted with restrictions or denied, and a decision letter then is issued. Decisions restricting or denying an application can be appealed. For applications that are granted, or granted with restrictions, accompanying the decision letter is a membership agreement, which the firm has 25 days to review and execute.
The membership agreement is a document which outlines the framework within which the firm can operate. The applicant’s membership approval is contingent on an executed membership agreement with FINRA. The agreement also certifies that the applicant will comply with various securities rules and regulations. Applicants must sign and return the Membership Agreement via Firm Gateway to the MAP examiner. You do not need to send a paper copy.
Withdrawing an Application
To voluntarily withdraw a membership application, the Applicant must submit electronically via Web CRD a Form BDW (PDF 272 KB ). Application fees and forms will not be returned.
Letting a Firm Membership Application Lapse
Applications for membership and/or individual registration may be lapsed if an Applicant fails to demonstrate progress to satisfy FINRA requirements or reconcile membership filing or qualification deficiencies. Allowing scheduled examinations to expire without taking the examination, failing to schedule or reschedule an examination, failing to timely provide information or to satisfy any membership prerequisite, failing to appear at or participate in a scheduled membership interview or failing to timely return an executed Membership Agreement constitute grounds for lapse (see NASD Rule 1012(b) ). A lapsed application does not represent a decision on the merits. However, generally speaking, the Applicant would be required to file a new application (together with a new application fee for a new member application) if it wishes to pursue the application.