Two Principal Waiver Request

Firms applying for FINRA membership, with the exception of sole proprietorships, must have at least two registered principals and one Financial and Operations Principal (FinOp), according to FINRA Rule 1010 Series. Applicant firms, however, may request a waiver or exemption from the two principal requirement in accordance with FINRA Rule 9610 if the firm will be conducting a very limited scope of business.

Any waiver request will be evaluated by FINRA’s Membership Application Program (MAP) based on the facts and circumstances of the application, and the Applicant will be informed, in writing, of FINRA’s determination. If a waiver is granted, the applicant firm must still employ a FinOp who has passed a Series 27 or 28 qualification exam. The FinOp may be the same individual who has passed the Series 24 qualification exam or a different individual. 

Applicants sometimes fail to consider the need for a waiver at the outset of the membership process, which can result in considerable delay. Applicant firms should determine whether a waiver will be sought at the time the application is filed and submit the required paperwork early in the process.

How to Submit a Two Principal Waiver Request

If the New Member Application (Form NMA) has not yet been filed, note that the Applicant must indicate in “Section III – Personnel” that a waiver is being requested. Further, the Applicant should respond “yes” to question #1 of Standard 2 of Form NMA, which asks if the Applicant is seeking a waiver. The Applicant must also provide the rationale referenced below to the application.

What to Include in a Two Principal Waiver Request

The waiver submission must include a detailed description and supporting documentation for the firm’s request. These items must explain why a waiver is being requested and provide evidence to indicate conclusively that only one person associated with the firm should be required to register as a principal. The waiver request must contain:

• The name, CRD number and qualifications of the associated person who will serve as the sole Principal, as well as a detailed description of their experiences —including information about work with the Firm’s approved businesses and serving as the Chief Compliance Officer. 
• The rule from which the Applicant is seeking an exemption or waiver, 
• a detailed rationale of the grounds for granting the exemption or waiver.

Note that Rule 1210.01 provides that the two-principal requirement of Rule 1220(a)(2) may be waived "in situations that indicate conclusively that only one person associated with an Applicant for membership should be required to register as a principal."

Technical Guidance: Submitting the Two Principal Waiver Request

Note: The firm’s Super Account Administrator (SAA) will be entitled with the administrator “CMA” privilege once the Form NMA is approved. Filers must have this user privilege in order to access and submit the Two Principal Waiver filing.

Questions? Contact Us

• Technical Filing Support: Contact the FINRA Support Center at (800) 321-6273.
• FINRA Gateway Support: Inquiries can also be submitted through the Support feature in FINRA Gateway. The Support tool allows you to submit a ticket with information and documentation for an issue, then track progress from within the system. FINRA will route the ticket to the appropriate team for review.