Frequently Asked Questions about Continuing Membership Applications
On This Page
Q 1. Is adding a branch office considered a “material change” in business?
A1. Adding a branch office may be considered a material change on its own, depending on how many offices your firm has already, how many your firm has added in the past year, as well as whether your firm is operating subject to a restriction. It could also cause a material change depending on the specific facts and circumstances. See the Safe Harbor page for more information.
Q2. Are firms required to submit a CMA for partial ownership changes?
A2. It depends on the circumstances. If a new person or entity will end up controlling 25 percent or more of your firm, then a CMA is required. In addition, if the firm is adding an individual and/or entity who will be controlling the broker dealer, a CMA is required.
Q3. If a firm currently operating without a written membership agreement adds a business line to its operations, is it required to give notice under FINRA Rule 1017?
A3. Depending on the facts and circumstances, an addition of a business line to a firm’s operations may or may not be material—whether or not the firm is operating with a written membership agreement.
Q4. Are firms required to submit a CMA for changes in product mix?
A4. A CMA is required for any material change in business. Though it’s possible that a change in product mix might not require a CMA, one will be required if the result is a material change to your firm’s business.
For example, such 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 if the new products 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. When considering such changes, please review Rule 1017 carefully. If you have additional questions, you should contact your FINRA District Office or Single Point of Accountability.
Q5. My firm is planning to add eight representatives to its staff. Do we have to request approval from FINRA for this change?
A5. In short, it depends on a number of factors, including the size of your firm, and whether your firm is eligible to take advantage of the safe harbor for business expansions (see IM-1011-1), or if your firm has a membership agreement that does not contain a restriction on the types of expansions permitted by the safe harbor.
Under the safe harbor, some expansions are not considered material, and thus do not require FINRA approval.
See the next question and the Safe Harbors page for more details.
Q6. Is there a fee for filing a CMA?
A6. Yes. Visit the Membership Fees page for more information.
Note that because each continuing membership request is unique, each CMA requires different supporting documentation specific to the facts and circumstances of that CMA.
Once the firm determines which documents it should include in its application and the documents are complete, the firm should complete the CMA Fee Computation Worksheet, which is found on Firm Gateway, attach it to the Form CMA and submit via Firm Gateway.
Q7. Who can we contact if we have further questions about CMAs and FINRA Rule 1017?
A7. You may contact the FINRA MAP Group or your firm's Single Point of Accountability.