After You Apply
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The Membership Application Program (MAP) Group conducts an initial assessment of each New Member Application (NMA). After receiving a New Membership Application, FINRA must review and process it within 180 calendar days.
The following is a look at how the process works.
- Preliminary Review
- Evaluate Against Standards for Admission
- Amendments to an Application
- Membership Interview
- Application Decision
Once a New Membership Application is submitted, FINRA’s MAP Group staff will assess the application to determine if it is substantially complete. An application is considered substantially complete if it provides enough information for staff to conduct a meaningful review.
If the application is found to be substantially incomplete, the Applicant will be given five days to correct the deficiency. If the deficiency is not corrected, FINRA will reject the application and deem it to not have been filed. FINRA will send the Applicant a written notification of that determination, along with the reasons. FINRA also will refund the application fee, less a $500 processing fee. Furthermore, any fees already disbursed for state registration(s) and any other non-refundable fees (e.g., fingerprint processing fees) will not be returned. An Applicant firm that decides to continue seeking membership shall be required to submit a new application and fee.
Applications may be deemed “not substantially complete” for one or more of the following reasons:
- Failure to submit a completed Form NMA and all attachments and information designated in the Form NMA as required;
- Failure to submit sufficient information and documentation to allow the staff to commence a meaningful review of the application. Required documents include but are not limited to the following:
- Written Supervisory Procedures (WSPs);
- Evidence of a firm’s source of funding (e.g., prior 3 months bank statements);
- All corporate documents, including exhibits;
- A complete ownership chart;
- A complete supervisory chart; and
- A detailed description of the proposed business model.
If the filing is deemed substantially complete, FINRA staff then has 30 days to complete its preliminary review and determine whether more information is needed. If additional information is required, FINRA staff must issue a written request within this timeframe.
The Applicant will then have 60 calendar days to fully respond to FINRA’s initial request. To keep the matter moving efficiently, we recommend firms respond as soon as possible and not take the entire 60 days. All subsequent requests and/or responses follow a 30-day timeframe.
Once deemed complete, the application is also assessed to determine if the filing is a potential candidate for Fast-Track Review, evaluating, among other things, the risk, complexity, regulatory significance, completeness, scale and scope of the matter. If an Applicant is deemed eligible for Fast-Track review, the firm must agree in writing to abbreviated turnaround times for responding to staff’s requests for information.
Each Applicant for FINRA membership will be assessed in accordance with the 14 Standards for Admission contained in Membership and Registration Rule 1014.
Occasionally, Applicants may need to amend Form BD and/or the relevant supporting documentation after filing their initial membership application. Importantly, information in Form BD and the membership application must be kept current. However, keep in mind that amendments to an application may delay the time for FINRA to make a decision. If substantial changes are made to an application, firms may be asked to withdraw the current application and refile, which may incur additional fees. Given this, it is important firms evaluate the business plan and are ready to start up at the time of filing.
All Applicants for membership are required to participate in a Membership Interview conducted by FINRA staff. Membership interviews provide an opportunity for Applicants to demonstrate how they meet the Standards for Admission to operate a prospective member firm. The focus of FINRA staff inquiries and the majority of discussions during the interview will typically relate to an Applicant’s ability to meet the Standards for Admission set forth in FINRA Rule 1014.
In issuing its decision, FINRA considers the application, the membership interview and other information, as well as the protection of investors. After a review is complete, FINRA will decide whether membership is granted, granted with restrictions or denied and a decision letter will be issued.
Decisions restricting or denying an application can be appealed. For applications that are granted, or granted with restrictions, accompanying the decision letter is a membership agreement, which the firm has 25 days to review and execute.
The membership agreement is a document that outlines the framework within which the firm can operate. The Applicant’s membership approval is contingent on an executed membership agreement. The agreement also certifies that the Applicant will comply with various securities rules and regulations. Applicants must sign and return the Membership Agreement via Firm Gateway. You do not need to send a paper copy.
- Processing Applications
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;
- Whether or not the Applicant submits all appropriate information/documentation as requested by the staff;
- Requests for "No Action" or interpretive letters and/or guidance from the SEC.
- Withdrawing an Application
There can be instances where an Applicant wishes to withdraw their application. To do this the Applicant must email the MAP examiner stating its’ intention to withdraw. In addition, the Applicant must submit electronically Form BDW. Application fees and forms will not be returned.
- Filing Extensions and Application Lapse
All specified deadlines must be met. If an Applicant believes it is unable to meet any deadlines it may request an extension in writing explaining why an extension is needed.
If deadlines are not met, an application will lapse (i.e., terminate) absent a showing of good cause. Allowing scheduled examinations to expire without taking the examination, failing to schedule or reschedule an examination, failing to timely provide information or to satisfy any membership prerequisite, failing to appear at or participate in a scheduled membership interview or failing to timely return an executed Membership Agreement constitute grounds for lapse (see FINRA Rule 1012(b)).
A lapsed application does not represent a decision on the merits of an application. Milestone deadlines are especially important to remember in the new membership process, however, because membership fees are not refundable upon an application lapse. Applicants would be required to file a new application.