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.

Standard FINRA Subordination Agreement Templates

How to Submit Subordinated Loans Related Requests

FINRA has implemented a platform to submit Subordinated Loan related requests electronically through the FINRA Gateway. For additional information, see Regulatory Notice 15-42.

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 

Training Resources

Need Help?

Please contact the following individuals for any questions related to Subordination agreements:

  • Diana Hernandez, Principal Analyst at (561) 443-8091
  • Andrea Lambert, Associate Director by email
  • Regulatory Notice 15-42
    FINRA to Require Electronic Submission of Subordination Approval Requests
    11/02/2015
  • Regulatory Notice 15-25
    FINRA Announces Updates of the Interpretations of Financial and Operational Rules
    06/29/2015
  • Regulatory Notice 10-15
    FINRA Requirements for Subordinations
    03/30/2010
  • Notice to Members 02-32
    SEC Approves NASD Rule Requiring Members to Require Investors to Sign a Disclosure Document as Part of a Subordinated Loan Agreement
    06/11/2002
  • Investor Insights
    Subordination Agreements: Understand the Risks
    When you think of investments and brokerage firms, you probably think of opening an account and buying stocks, bonds or mutual funds. But when you enter into a subordination agreement, the investment you’re making is in the brokerage firm itself. This investment can be very risky and isn’t suitable for everyone.