Registration Requirements

This section contains guidance to the Applicant on required registrations and qualifications for the Applicant and its associated persons. Prior to commencing the submission of the Forms U4 and to ensure that the Applicant's Forms BD and BR are accurate, you must determine what registrations will be required. The information in this section will assist you. Once you have reviewed this section on Registration and Qualifications, you may access CRD and complete and submit Forms U4, BR, and amended Form BD. Simply click on the Web CRD tab above to gain access.

General Overview of the New Member Application Process

Start
Applicant prepares and submits original, notarized Form BD & Web CRD Entitlement Forms.

Orientation
Applicant accesses and reviews Applicant Interface to understand NMA Process.

Registration Requirements
Applicant prepares and submits Forms U4 and BR.

Membership Application
Applicant prepares and submits Form NMA and any additional information required.

Interview
Staff schedules and conducts interview.

Decision
Staff issues decision on Application and Membership Agreement as appropriate.

This section provides information on the following topics. You may click on any link to skip directly to that topic.

Applicant Registration Requirements
Individual Registration and Qualification Requirements
Scheduling Examinations
Termination of Registrations
Dependencies/Timing
How to Prepare
Common Pitfalls and Mistakes

Applicant Registration Requirements

FINRA and SEC Registration: All firms must register with the SEC and FINRA by filing a hard copy Form BD.
State Registration: All firms must also register with the states in which they intend to do business. (Form BD enables firms to register with the states. However, some states require applicants to file additional documentation. Consult the states' websites of the various states in which you plan to do a securities business to identify these additional filing requirements.)
Branch Registration: All firms must file Form BR to register each of the Applicant's branch offices. See FINRA guidance and definition of a Branch Office.
Other Registrations: You should also check the following organizations to determine whether additional registration is required.

MSRB Registration	All broker-dealers that will offer and sell municipal securities also need to register with MSRB. To obtain information on MSRB rules, regulations and filing requirements contact: Municipal Securities Rulemaking Board 1900 Duke Street, Suite 600 Alexandria, VA 22314 (703) 223-9503
Securities Information Center Registration	SEC Rule 17f-1 requires all Applicants to register as direct or indirect inquirers in the Securities Information Center's Lost and Stolen Securities Program unless the Applicant is exempt from registration. To find out about possible exemption status, please call the FINRA district office that is handling or will handle the application. A broker-dealer may become an indirect inquirer through its clearing firm. Broker-dealers may request materials upon registering with FINRA by contacting: Securities Information Center Operations Manager P.O. Box 9151 Boston, MA 02205-9151 (617) 345-4910
SIPC Registration	All non-bank broker-dealers registered with the SEC that conduct their principal business within the United States, its territories or possessions must become members of the Securities Investor Protection Corporation (SIPC). Exempted from the SIPC requirement are applicants that exclusively sell mutual fund shares, variable annuities, insurance and government securities, or furnish investment advice to investment companies or insurance companies. Broker-dealers may request SIPC membership materials when registration with FINRA becomes effective. SIPC information is available from: Securities Investor Protection Corporation Membership Department 805 15th Street, NW, Suite 800 Washington, DC 20005 (202) 371-8300

Individual Registration and Qualification Requirements

Individuals employed by broker-dealers fall into two broad categories or functions: Registered Representatives and Principals.

Registered Representatives are generally sales personnel engaged in securities business activities such as sales, trading and investment banking. As noted, the registrations and qualifications required for registered representatives are keyed to the types of products they are selling or in some instances to the capacity in which they are functioning.
Principals are generally officers of the Applicant and other management and supervisory personnel involved in the day-to-day management or operation of the Applicant's investment banking or securities business. Except for the Financial Operations Principal, an individual must first qualify as a registered representative in order to qualify as a principal.

Filing Requirements. Individuals may register with FINRA only if employed or sponsored by a FINRA member firm or an applicant pending membership. To complete registration for all individuals who will be in either a sales or management capacity with the firm, the Applicant firm must file the following for each individual:

Form U4 (Link to Form U4)
Fingerprint Cards
Application fees

Filing Fees: The magnitude of fees applicable to an Applicant will vary based on a number of factors, including:

The number of states in which the firm will conduct business
The number of Associated Persons registered with the firm
The number of licensing examinations that need to be taken by the Associated Persons.

See the Registration/Exam Fee Schedule for additional details.

Individual Qualifications. All individuals employed by the firm must demonstrate competency by passing examinations administered by FINRA. The required examinations are linked to the capacity in which the individual will function at the broker-dealer and/or to the products the individual is engaged in selling. Individuals to be employed by the applicant firm who do not have the appropriate qualifications examinations must take and pass these examinations before the applicant's membership can be approved by FINRA. See FINRA's Qualifications guidance for additional information on which examinations are applicable by product and function. Firms may schedule qualifications examinations for their personnel by filing Form U4 and submitting the appropriate applications and examination fees.

It is strongly suggested that the personnel required to register satisfy their examination requirements no later than 90 days after the application for membership in FINRA has been submitted.

Principal Registrations Required

General Securities Principals. Pursuant to Rule 1021, a firm, with the exception of a sole proprietorship, is required to have at least two officers or partners who are registered as principals with respect to each aspect of the firm's investment banking and securities business.
Two-Principal Waiver. An applicant may apply for a waiver of the two-principal requirement of Rule 1021(e). The waiver is contingent upon the firm's conducting a very limited scope of business. If a waiver is granted, the principal at the firm must be qualified as a Financial Operations Principal. (NASD Rule 1022(c))

To apply for a waiver of the two-principal requirement, follow these steps:
- Make a written request for the waiver pursuant to NASD Rule 9600 (which provides for waivers of the requirement in Rule 1021(e) as appropriate). This request should be directed to the District or Regional Office responsible for processing the new membership application, to the attention of the assigned analyst (if the application has already been filed). If the application has not yet been filed, note that you must indicate in Section III - Personnel of the Form NMA that this waiver is being requested. You must also attach the rationale referenced below to the Form NMA.
- The waiver request must contain: (i) the Applicant's name and address; (ii) the name of the person associated with the firm who will serve as the primary contact for the application; (iii) the rule from which the applicant is seeking an exemption or waiver; and (iv) a detailed rationale of the grounds for granting the exemption or waiver. Note that Rule 1021(e)(2) provides that the two-principal requirement of Rule 1021(e)(1) 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."
- A copy of the request must be sent to the FINRA's Office of General Counsel, Attn: Waivers, 1735 K Street NW, Washington DC, 20006.
- This waiver request will be evaluated in light of the facts and circumstances of the application and the Applicant will be informed, in writing, of the Staff's determination.
Financial and Operations Principal. Each firm must have a principal qualified and registered as a Financial and Operations Principal or an Introducing Broker-Dealer Financial and Operations Principal, as appropriate to the proposed business.

Registration Exemptions

Employees exempt from FINRA registration include individuals whose functions are:

Solely clerical and/or ministerial in nature,
Related solely to the member's need for nominal corporate officers or capital participation (limited partners), OR
Related exclusively to transactions executed on a securities exchange or transactions in commodities.

See Rule 1060 for additional details on Persons Exempt from Registration. For persons who fall within the parameters of this Rule, supporting Attestations are required. These Attestations are available within the Form NMA.

Scheduling Examinations

After an Applicant has filed its application for broker-dealer registration, the Applicant may schedule qualification examinations for their personnel by filing Form U4 electronically via Web CRD. Upon selecting the appropriate registration category on the Form U4, if a qualifying exam is required, an exam window (i.e. the timeframe within which the examination must be completed) will become available once the required examination fees have been submitted.

For Guidance for Scheduling and Taking Exams, see Qualifications Guidance.

Termination of Registrations

If the Applicant decides to change its mind about applying for registration as a broker-dealer after submitting Form BD and Forms U4, you will need to do the following:

Notify the district office processing your application
File Form BDW (Broker-Dealer Withdrawal)
File Form U5 for all persons for whom a Form U4 has been filed.

No application fees will be refunded if the Applicant terminates its registration. If the Applicant later decides to file an application for broker-dealer registration, the application process will have to be commenced from the beginning, with the filing of new Forms BD, U4, BR, and NMA and a new application fee.

Dependencies/Timing

Form BD must be completed prior to filing Form U4s for persons whom the applicant wishes to register with the firm.
Form BD is used to register the Applicant with the states in which it intends to do business.
All qualifications examinations for individuals should be successfully completed within 90 days after the Application is filed.
Form NMA retrieves and displays certain key information from the Form BD, BR and U4 for the Applicant. Entries to these forms are updated overnight and become available to Form NMA the following day. Be sure to allow sufficient time for these updates to occur.

How to Prepare

Print and review Forms BD and U4.
Collect all pertinent information required in the above forms.

Common Pitfalls/Mistakes

The table below lists some common pitfalls and mistakes in the registration process and what might be done to avoid them.

Common Pitfalls and Mistakes	Mitigating Solutions
Key personnel do not have appropriate qualifications. This is a major source of delays in processing the application.	Allow adequate time for personnel to prepare and take qualifications examinations. It is recommended that all required examinations be completed and passed within 90 days after the application is filed.
The firm seeks a waiver of principal requirement too late in the process. Sometimes an Applicant fails to consider the need for a waiver at the outset of the application process, and doing so later in the process can mean considerable delay.	Determine whether a waiver will be sought at the time the application is filed and submit the required paperwork early in the process.
Lack of clear understanding of the different roles that require registration. Applicants sometimes enter the application process with personnel who lack principal registration when, upon closer analysis by the staff, it is evident that their roles in the firm require them to register as principals.	Consider the roles and responsibilities of all proposed associated persons, and determine whether they are required to register. Consult the following resources as needed: NASD Rule 1021 and Notice to Members 99-49.