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. See Regulatory Notice 10-15 for more information, including details of FINRA's requirements for proposed subordinations.
Effective November 30, 2015, FINRA is launching a new electronic platform on Firm Gateway for firms to submit all new requests for approval of proposed subordinated loan agreements and secured demand note agreements (referred to as subordinations), including renewals of existing agreements. Learn more.
Below are links to seven standard forms of agreements. Firms may, but are not required to, use these standard forms for proposed subordinations. A link to the Lender's Attestation is also below.
See the Types of Standard Forms (PDF 43 KB) table for a summary of the standard forms of subordination agreements and key characteristics of each form. Firms are encouraged to contact their assigned Regulatory Coordinator or Regulatory Specialist for questions about which forms they should or can use given their particular circumstances. See Regulatory Notice 10-15 for details.
Subordinated Loan Agreements
- FINRA Form SL – 31D (Cash, Debt) (Word 192 KB)
- FINRA Form SL – 31E (Cash, Equity) (Word 159 KB)
- FINRA Form SL – 31T (Cash, Temporary) (Word 160 KB)
Secured Demand Note Collateral Agreements
- FINRA Form SDN – 32D (SDN, Debt) (Word 538 KB)
- FINRA Form SDN – 32E (SDN, Equity) (Word 476 KB)
- FINRA Form SDN – 32T (SDN, Temporary) (Word 492 KB)
Revolving Note and Cash Subordination Agreement
- Form REV – 33R (Revolver) (Word 286 KB)
- Subordination Agreement Lender's Attestation (Word 120 KB)