Processing Membership Applications

Once a substantially complete application has been filed, within 30 days of receipt of the application by the MAP Group, FINRA staff assigned to process the application will conduct a review to determine whether FINRA requires more information from the Applicant to conduct a meaningful review of the application.

In addition to reviews conducted the MAP Group, other FINRA staff and processes are involved in the review of the new membership application. These are briefly highlighted below.

 

CRD (Central Registration Depository)

FINRA, in partnership with the North American Securities Administrators Association, Inc. (NASAA), developed a computerized system, called the Central Registration Depository (CRD or Web CRD), to streamline the application and licensing procedures for industry personnel. The system consists of a central registration information data bank and an application-processing facility, with each of its regulatory participants linked to the central facility through a nationwide network of Web-based, online terminals.

In addition to FINRA representative and principal registration applications, the system processes application filings for agent registration for state securities agencies and the securities agencies of the District of Columbia and Puerto Rico. FINRA processes application filings for dual membership between FINRA and the American Stock Exchange (Amex), the Boston Stock Exchange (NASDAQ OMX BX), the Chicago Board Options Exchange (CBOE), the Chicago Stock Exchange (CHX), the New York Stock Exchange (NYSE), the Philadelphia Stock Exchange (PHLX) and/or the International Securities Exchange (ISE). The Applicant must first be approved as a member firm of the appropriate exchanges before individual applications for associated person registration with those exchanges can be filed on Form U4 via Web CRD for processing.

The Web CRD system streamlines the processing of associated person registration filings for FINRA members by allowing them to submit a single form and the combined payment of fees to achieve multiple registrations. In addition, the CRD system's centralized processing functions include Form BD and broker-dealer, registration-related processing for states. Each regulator can advise the Applicant if there are additional requirements beyond submitting Form BD to FINRA.

 

The Department of Regulatory Review and Disclosure's Role

Upon receipt by Regulatory Review and Disclosure, the Form BD is imaged/indexed and assigned to a Regulatory Review and Disclosure analyst (RAD Analyst). The RAD Analyst sends the Applicant written acknowledgement, records the Form BD data into the CRD system and serves as the Applicant's FINRA liaison for that portion of the application.

Any additional required information, correspondence and fees sent to Regulatory Review and Disclosure are to be sent to the attention of the RAD Analyst. The RAD Analyst will assist with CRD and registration-related information, and provide updates to the Applicant and the MAP Group staff processing the application on the status of the filing and qualifications of the Applicant's personnel.

 

 

Form U4 Notice Queues 

Once an Applicant gains access to the CRD system through the Entitlement process, FINRA notifies Applicants via Notice Queues for Individuals of examination scheduling and results, and registration statuses and deficient conditions. Applicants and member firms should review Notice Queues on a regular basis for deficiencies that require amended filings and retained as records of effective FINRA, state and exchange registration approvals. Deficient conditions may be corrected by filing amended forms electronically via Web CRD.

Once a Form U4 has been filed by the Applicant on behalf of an individual, the Applicant will be able to access the following Notice Queues in CRD for information concerning that individual's registration:

 

  • Approved Individual Registrations: displays individuals with registrations that are Approved, Approved Pending Prints, Approved Pending Results, Restricted Approval and Temporary Registration.
  • Current Individual Deficiencies: displays individuals' registrations that have one or more deficiency.
  • Denied Individual Registrations: displays individuals with registrations that a regulator has denied or rejected.
  • Pending Individual Registrations: displays individuals' non-deficient registrations that are waiting for a jurisdiction approval.
  • Disclosure Review: displays individuals that have had a disclosure submitted to CRD through a Form U4, U5 or U6 filing.
  • Outstanding Disclosure Letters: displays individuals that have a disclosure deficiency or inquiry letter that has been sent to the Applicant/member firm electronically and is unresolved. Investment adviser representatives will not appear in this queue.
  • Fingerprint Status Received From FBI: displays notices from the FBI regarding an individual's fingerprint card status. Investment adviser representatives will not appear in this queue.
  • Inactive Registration Due to Missing Fingerprints: displays individuals with registration statuses that changed from Approved Pending Prints to Inactive Prints because fingerprint cards were not received by FINRA within thirty (30) days. Investment adviser representatives will not appear in this queue.
  • Notices of Undelivered Fingerprint Cards: displays individuals that have outstanding fingerprint cards. If the card is not received within thirty (30) days from the filing date, the individual will appear in the Inactive Registration Due to Missing Fingerprint Notice queue. Investment adviser representatives will not appear in this queue.
  • Scheduled Exams: displays individuals that have open exam windows.
  • Completed Exams: displays exam results for exams taken within a specified time frame.

 

Form BD Notice Queues

Once an Applicant gains access to Web CRD, FINRA provides notification via Notice Queues for Organizations about current deficiencies, member registration withdrawal or termination, and firm retirement from a simultaneous filing group. Applicants and member firms should review Notice Queues on a regular basis to resolve promptly any deficiencies, by way of an amendment to Form BD or otherwise.

Once the initial Form BD is entered in CRD by FINRA staff and the Applicant is entitled to Web CRD, the Applicant will be able to access the following Notice Queues for information concerning the Applicant's registration:

 

  • Current Deficiencies: Lists current Form BD and BDW deficiencies by filing date. The number of days deficient is also displayed. A link is available to obtain deficiency detail information. Notices remain in queue until the deficiency is satisfied.
  • SFG Retirement: Lists the retiring member firm for simultaneous filing group, by date of retirement. Notices remain in queue for one hundred twenty (120) days.
  • Withdrawal or Termination Queue: Lists the Applicant/member firm's withdrawal or termination notices by effective date. The screen includes the regulator reason and effective date. Notices remain in queue for one hundred twenty (120) days.

 

Web CRD Accounting

FINRA, through Web CRD, collects and assesses registration-related FINRA fees, and also collects and disburses state and SRO registration fees for Applicants and member firms. In conjunction with creating a data record in the CRD system for each Applicant, CRD automatically assigns each Applicant a unique CRD identification number. The Applicant's CRD number is used to identify two key financial accounts that are created for each Applicant, the FINRA Flex-Funding (Daily Account) and the Renewal Account.

The Flex-Funding Account is the primary account that reflects the account status. All registration-related charges are debited from this account. The Renewal Account is the account used by member firms to participate in the annual Renewal Program. The Renewal Program enables firms, firm branch offices and individuals to maintain an active registration status in the coming year with FINRA, other regulators and the states in which they conduct business. There are three payment methods for funding the Daily or Renewal Account: (1) check or money order, (2) wire payments or (3) E-Bill. To ensure accurate processing, Applicants and member firms should include the assigned organization CRD number and the Applicant/member firm's name on all checks or money orders. Deposits received before 2 p.m., ET, will be posted to the account on the next business day. Deposits received after 2 p.m., ET, will be posted to the account in two business days. Payment addresses, wire transfer instructions and E-Bill information is available on our site .

All registration, termination, examination and fingerprint processing fees, and any other registration-associated fees, are automatically charged against the Applicant's Flex-Funding Account upon submission by members or Applicants, and processing by FINRA, of appropriate form filings and associated registration and disclosure information. Renewal fees are assessed annually and payable against the member firm's Renewal Account. Online balance and detailed transaction information for each account is viewable through the CRD system. Account balance information generally is updated after the close of business during an automated nightly reconciliation process.

At the start of each day, an Applicant or member firm must show a credit balance in their Flex-Funding Account in order for registration-related filings to be processed. In particular, sufficient funds must be on deposit while an application is being processed to satisfy all application fees. If sufficient funds are not available in an account to process an application or other transaction, all further registration-related processing ceases as to that Applicant, including the form that caused the fee deficiency. Processing will not begin again until the funds deficiency is corrected.

The Web CRD Accounting system eliminates the need for Applicants to draft and submit separate payments for each registration or renewal. Group submission of forms should be accompanied by a single check for the total amount of fees required. Because it is possible to miscalculate the total fees due for any application or group of filings, and processing delays may result, FINRA encourages Applicants to maintain a credit balance in the Flex-Funding Account. This allows an Applicant to deposit a blanket amount of funds in its CRD system account, instead of submitting separate checks with each filing. For example, many member firms submit monthly deposits in an amount based on their average monthly filing and registration volume. Members that do not have a significant registration volume may avoid delays associated with fee deficiencies by maintaining a minimal amount of excess funds in their CRD accounts.

 

The MAP Group and District Office Roles

Within 30 days of receipt of a substantially complete application, the assigned FINRA Examiner in the MAP Group will advise the Applicant in writing if any additional information is required to be filed. The Applicant will have 60 days to respond to this initial request letter for information or documentation. Within 30 days of the receipt of additional information or documentation from the Applicant, FINRA may make a subsequent request for information. Prior to making a decision on the application, the assigned FINRA MAP Group Examiner will schedule a Membership Interview and may schedule a Pre-Membership Examination when appropriate. Staff from the District Office in the District in which the Applicant's principal place of business will be located in the event the application is approved will also attend and conduct the Membership Interview.

FINRA will be able to process complete and accurately prepared applications more quickly. The amount of time required to process the application may be impacted by any of the following:

 

  • the number of broker-dealer personnel required to pass qualification examinations;
  • the complexity of the proposed business activities,
  • required approval from state securities regulators or other SROs; and
  • requests for "No Action" or interpretive letters from the SEC.

 

Processing Membership Applications—FAQ

What steps does FINRA staff take to determine an Applicant's "source of capital"?

Determining sources of capital is a key step in the application process. The staff takes all reasonable steps to clearly understand the nature and source of capital and the background and relevant disciplinary history of all persons involved in providing such capital. Examples of documents that may be requested include, but are not limited to, copies of canceled checks, deposit slips, monthly bank account statements, securities statements, tax returns and loan documents. See Section IV Net Capital and Sources of Funding - Information and Supporting Documentation, in the Form NMA.

 

How does FINRA MAP Group staff evaluate the employment of part-time management or registration positions?

The Rules allow the employment of part-time management or registration positions. The key question is whether a person functioning on less than a full-time basis can properly discharge the responsibilities of the position. If the Applicant (or member firm) cannot satisfactorily show that a function will be adequately and appropriately handled by someone in a part-time capacity, FINRA MAP Group staff may require the employment of a full-time person or another part-time individual who is able to properly discharge the responsibilities of the position.

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