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Complete and Accurate Application All aspects of the membership application must be complete and accurate, including all forms and agreements signed and executed by authorized personnel of the Applicant. Registrations are required for both the firm and the individuals associated with the firm.
One prerequisite for registration is successful completion of each required qualification examination. Those individuals who wish to take a qualification examination can do so if "sponsored" by a current member firm or an Applicant for FINRA membership.
Where a person has previously passed broker dealer business plan qualifications exam and has been registered with a member firm within the previous two years, additional qualification examinations would not be required in order to continue functioning in the same capacity.
Where new or additional examinations are required in order for an individual to function as proposed at a new member firm, a new member application will need to have been filed so that there is a member firm through which the individual may become registered. In this regard, an individual who will be associated with a new member Applicant may require a series of examinations that could exceed the timeframe within which an Applicant must submit information see NASD Rule b 1 A and, thereby need to request in writing an extension of time from the FINRA District Office staff in order to avoid a lapse of the application and meet the qualification requirements.
The Applicant may, however, request, in writing, a waiver or exemption from the two principal requirement based on its proposed business in accordance with NASD Rule For example, if the Applicant intends to conduct business in options or municipal securities, it will be required to have the appropriate individuals maintain the necessary options or municipal registrations.
Principal registration may also be required where indications of control exist. Persons in managerial positions normally require principal registration.
However, a registered representative may not automatically need principal registration, nor would an individual who is an officer of the corporation solely for ministerial purposes e.
This most often occurs in situations where the member firms are separate but otherwise related. Where simultaneous securities registrations exist, the FINRA District Office staff will consider the ability of the individual to adequately meet the various responsibilities assigned for each of the firms at which the individual is registered.
Applicants should be aware, however, that some states do not allow simultaneous or multiple securities registrations.
Since all important membership communications, including votes, are directed to these individuals, it is critical that the designated representative is the appropriate person to ensure that important information is disseminated properly at the firm.
Each executive representative must have an e-mail account so as to facilitate timely member firm-related communications. Some states require that the Series 63 qualification examination be completed for registration in the state.
There are no further documentation requirements for registration with the SEC. Also, consideration will be given to the adequacy of the methods to be employed to preclude reoccurrence of any previous deficiencies.
The FINRA District Office staff will also take into consideration whether any persons associated with the Applicant have any disciplinary actions taken against them by other industry authorities, customer complaints, adverse arbitrations, pending or unadjudicated matters, civil actions, remedial actions imposed, or other industry-related matters that could pose a threat to public investors.
Contractual or Other Arrangements and Business Relationships At the time the application is submitted or shortly thereafter, the Applicant should be in a position to describe the contractual or other arrangements and other business relationships that will allow the Applicant to operate in accordance with the business plan as submitted.
The Applicant is also required to submit copies of all draft or final agreements for the proposed business, including those with banks, clearing entities, or service bureaus. Adequacy of Communications and Operational Systems The communications and operational systems that the Applicant intends to employ for the purpose of conducting business with customers and other members must be adequate and provide reasonably for business continuity with respect to: That Applicant will be required to review its communications and operational systems and certify to the FINRA District Office that these systems are adequate for the proposed business.
The Applicant may, but is not required to, utilize the services of a third party to arrive at the determination of systems adequacy. Failure to make reports timely and accurately will normally result in formal disciplinary action. Among other things, this plan must include a detailed description of projected revenues that will be generated by the business operation and the costs expended in pursuit of those revenues, as well as any forms of capital contributed including a basis for the projections.
Adequate Funds to Meet Contractual Obligations, Including Market Making In instances where a firm makes markets, it makes a commitment to buy or sell securities at stated prices. Thus, the required amount of capital will depend upon the number of markets to be made, the relative price range of such securities, and consideration for the historical volatility of these securities.
The amount of capital that will be considered adequate to meet these obligations will depend upon the size and frequency of the underwriting.
Risks to Capital If the Applicant will be engaged in underwritings or proprietary trading, the District Office staff may consider relative risk, volatility, degree of liquidity, and the speculative nature of the securities where applicable.
Self-Clearing Firms New firms may pose heightened financial risks to customer positions. All self-clearing firms are required to set aside moneys in a separate bank reserve account which is meant to protect customers who have positions at the firm in the event the firm were to fail.
Adequacy of Financial Controls There are extensive federal, state, and self-regulatory securities laws and regulations under which members must operate that place great emphasis on financial and operational responsibility.The Financial Industry Regulatory Authority (FINRA) requires a broker-dealer to provide a business plan with its New Membership Application.
To the extent that an area below is applicable to the proposed activities of the broker-dealer, the following areas should be included in the business plan.
Initial Broker Dealer Registration. Complete from start to finish, our registration services help establish your firm as a licensed Broker-Dealer. - - Preparation of revised broker-dealer business plan - - Amending Business Continuity Plan - - Updating Firm Element Continuing Education Plan - - Drafting of revised Organizational Chart.
4. Requirements for Membership In order to qualify for Membership, an applicant must satisfy IIROC’s financial and operations compliance, business conduct compliance and registration requirements.
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