Form BD vs. Form CMA
A firm is required to promptly update Form BD information by submitting amendments whenever the information on file becomes inaccurate or incomplete for any reason.
Additionally, when a FINRA member firm plans to undergo a material change in business operations it is required to file a Continuing Membership Application (CMA) with FINRA’s Membership Application Program (MAP) Group prior to implementing the material change.
A firm is required to file a Form CMA in the event of:
- a merger with another member firm;
- a direct or indirect acquisition of another member;
- direct or indirect acquisitions or transfers of 25 percent or more in the aggregate of the firm's assets, or any asset, business or line of operation that generates revenues comprising 25 percent or more in the aggregate of the firm's earnings measured on a rolling 36-month basis;
- a change in the equity ownership or partnership capital of the firm that results in one person or entity directly or indirectly owning or controlling 25 percent or more of the equity or partnership capital; or
- a material change in business operations as defined in Rule 1011(k).
NOTE: The filing of a Form BD amendment does not constitute "notice" of a CMA event under the FINRA Rule 1000 Series.
What to File: Form BD vs Form CMA
|Change||BD Amendment||CMA Filing|
|Report new or amended disclosure information||Yes||No|
|Update introducing, custody, or clearing arrangement details||Yes||No|
|Update the types of businesses conducted by the firm||Yes||Yes – if the change constitutes a material change in business operations as defined in Rule 1011(k)
|Add or remove an individual or entity listed on Schedules A/B||Yes||Yes – if said individual or entity has a 25% or greater ownership interest in the Applicant or if an individual has “control” of the day to day management of the firm.|
|Product mix change||Maybe – Would this encompass a change to Question #12 (Types of Business)?||Maybe – a change in product mix would require a CMA (and prior FINRA approval) if it removed or modified a membership agreement restriction; caused your firm to become a market-maker, underwriter or dealer for the first time; or required a higher net capital. A CMA may also be required if there are changes to the size of your firm, including the number of associated persons and branch offices.|
|Add a branch office||No – branch registration is requested via Form BR.||Maybe – a CMA may be required depending on how many offices your firm has already, how many your firm has added in the past year and whether your firm is operating subject to a restriction. It could also cause a material change depending on the specific facts and circumstances.|
|Increase the number of registered individuals||No – individual registration is requested via Form U4||Maybe – a CMA may be required depending on the size of your firm, the firm’s eligibility to take advantage of the safe harbor for business expansions and whether the firm has a membership agreement that contains a restriction on the types of expansions permitted by a safe harbor.|
NOTE: This table is intended as a general guide only. Firms should confirm filing requirements with their regulatory contact to ensure all required updates are made in accordance with FINRA rules. When considering such changes, please review Rule 1017 carefully. If you have additional questions, you should contact your District Office or Risk Monitoring Analyst.