Continuing Membership Application Resources
FINRA requires firms to file a continuing membership application (CMA) whenever they seek to expand or implement new ways of doing business. Firms also must file an application whenever they seek to modify or remove restrictions previously imposed in a membership agreement (a membership agreement change). This process helps protects investors by ensuring that a firm’s supervisory and compliance systems, policies and procedures keep pace with such changes.
There are a number of changes that require a firm to file a CMA, including when a firm wants to:
- make material changes to its business operations;
- make asset transfers; and
- change control or ownership, including mergers or acquisitions involving the firm.
When a firm submits a CMA, FINRA reviews it to determine whether the firm will continue to meet its regulatory obligations if the filing is approved. After FINRA’s assessment, the application is approved, denied or approved with restrictions.
The guidance and resources below explain the process of filing a CMA in more detail, including the information and documentation firms need to file in support of the CMA. FINRA also encourages firms to consult with their FINRA Coordinator when they are thinking of making a change to their business, as he or she can provide additional guidance on the CMA process.
Guidance and Resources
Overview of Materiality Consultation Process
Sometimes, changes contemplated by a firm do not clearly fall into a CMA category, and so a firm may seek guidance in terms of how best to proceed with the change.
Firms can learn about current regulatory issues at FINRA’s District Compliance Events, many of which cover the Membership Application Program.
Continuing Membership Guide
The Continuing Membership Guide addresses what FINRA is likely to consider when evaluating Rule 1017 applications. It includes sections on minimum application content and CMA requirements, and a set of Frequently Asked Questions.
Rules and Regulations
Firms planning a merger, acquisition or business expansion/transfer should be familiar with the following rules and regulations. This list is not comprehensive, as requirements may vary depending on each firm’s business. It is the responsibility of each firm to research all laws, rules and regulations that may be applicable to their particular business model.
NASD Rule 1017
Application for Approval of Change in Ownership, Control or Business Operations
NASD Rule 1011(k)
Definitions: Material Change in Business Operations
Safe Harbor for Business Expansions: Lists certain types of expansions that are presumed not to be material and therefore do not require an application for FINRA approval.
Incorporated NYSE Rule 312
Changes within Member Organizations
Regulatory Notice 10-01 (January 2010)
Proposed Consolidated FINRA Rules Governing FINRA’s Membership Application Proceedings; Comment Period Expires: March 5, 2010
Notice to Members 06-56 (October 2006)
SEC Approves Amendments to the Safe Harbor for Business Expansions; Effective Date: November 3, 2006
Notice to Members 04-10 (February 2004)
SEC Approves Amendments to Membership Application and Continuation Rules (Rules 1011, 1014, and 1017)
Notice to Members 02-54 (August 2002)
NASD Requests Comment on Proposed Amendments to Rules 1014 and 1017; Comment Period Expires September 20, 2002
Notice to Members 00-73 (October 2000)
SEC Approves Amendments to NASD Membership Rules; Effective Date: November 15, 2000