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.
Standard FINRA Subordination Agreement Templates
How to Submit Subordinated Loans Related Requests
To ensure you have access to the Subordinated Loans system, contact your firm's Super Account Administrator. For questions regarding the Subordinated Loan System, please contact FINRA Support Center at (301) 590-6500
Please contact the following individuals for any questions related to Subordination agreements:
- Bridget Catella, Associate Principal Examiner at (646) 315-8393
- Diana Hernandez, Principal Analyst at (561) 443-8091
- Andrea Lambert, Manager by email
- FINRA to Require Electronic Submission of Subordination Approval Requests11/02/2015
- FINRA Announces Updates of the Interpretations of Financial and Operational Rules06/29/2015
- FINRA Requirements for Subordinations03/30/2010
- SEC Approves NASD Rule Requiring Members to Require Investors to Sign a Disclosure Document as Part of a Subordinated Loan Agreement06/11/2002
- Investor AlertWhen you think of investments and brokerage firms, you probably think of opening an account and buying stocks, bonds, or mutual funds. When you enter into a subordination agreement, you are making an investment, but the investment is in the brokerage firm itself.