Membership Application Program Group (MAP) Frequently Asked Questions

Prospective FINRA member firms must seek approval for new FINRA membership through the submission of a New Membership Application (NMA or Form NMA) in accordance with FINRA Rule 1013 (New Member Application and Interview). Existing FINRA member firms that are contemplating a material change in ownership, control, or business operations must submit a Continuing Membership Application (CMA or Form CMA) in accordance with FINRA Rule 1017 (Application for Approval of Change in Ownership, Control, or Business Operations). Both types of applications are reviewed by FINRA’s Membership Application Program (MAP) Group. MAP’s review of Forms NMA and CMA are governed by the MAP rules under the FINRA Rule 1000 Series (Member Application and Associated Persons Registration). MAP also reviews requests for materiality consultations and requests for a waiver of the two principal requirement of FINRA Rule 1210 (Registration Requirements).

These FAQs cover basic questions around the application process and required documentation. FINRA’s Compliance Tools page and Membership Application Program (MAP) Tools page also includes additional resources for firms working with MAP on Forms NMA and CMA.

For any additional questions, please contact MAP by email or 212-858-4000 – Option 5 – Membership Applications.

General Provisions Applicable to NMAs and CMAs: Rejection; Lapse; Withdrawal

Subject to specified circumstances, there are two key administrative events that may occur before and after the application review process begins—application rejection and application lapse. The withdrawal of an application may occur at any time. For all such events, MAP ceases to review the application, and these outcomes do not constitute final action for purposes of an appeal.

Initial Review During First 30 Days After Application is Submitted to FINRA

1. What initial timing considerations are associated with an application that is submitted to FINRA?

During the first 30 days after an application is submitted to FINRA, MAP will conduct an initial review of the application to determine whether it contains enough information to start a meaningful review—i.e., is substantially complete—for purposes of deeming the application “filed.”

2. Under what circumstances would MAP reject an application?

An application needs to contain enough information to start a meaningful review of it.

Some examples of items that would generally be viewed as grounds for rejection include, among others, failing to have an operationally ready platform and failing to provide bank statements. Not providing key agreements (at a minimum, in draft form), such as operating agreements, purchase agreements, and other governing agreements may also be grounds for rejection. Applicants should consult the applicable guidance published to MAP’s Compliance Tools for information on what constitutes a substantially complete application for specific filing types.

3. If an application is at risk of rejection, does the applicant have an opportunity to address the deficiency before MAP rejects the application?

Yes. If the application does not meet the “substantially complete” threshold upon submission, MAP will notify the applicant and provide the applicant with an opportunity to correct the deficiency. In general, an applicant has five business days to correct the deficiency. If the deficiency is corrected, MAP will deem the application “substantially complete,” and the date on which that event occurs will then become the date the application is deemed “filed.” That “filed” date is used to calculate the decision due date. If the deficiency is not corrected, MAP will reject the application and deem it to not have been filed. MAP will send the applicant a written notification of that determination citing the reasons for rejection. For rejected applications, MAP will refund the application fee, less a $500 processing fee.

4. How does an applicant know when an application is deemed substantially complete?

MAP will send the applicant written notification that will include the date on which MAP deemed the application substantially complete. That date is the “filed” date for purposes of calculating the decision due date.

5. At what point during the application process does an applicant need to evidence that it is adequately funded?

Applicants must demonstrate the source of funds and the financial wherewithal in order for the application to be deemed substantially complete. MAP may also request more current, and additional financial documents, throughout various stages of the application review.

6. May an applicant appeal MAP’s decision to reject an application?

No. A rejected application cannot be appealed because it does not constitute final action by FINRA for purposes of pursuing further review of MAP decision in accordance with FINRA Rule 1015 (Review by National Adjudicatory Council). Once rejected, the applicant will have to submit a new application and fee pursuant to Schedule A to the FINRA By-Laws.

Activity That May Occur After an Application is Deemed “Filed”

7. Under what circumstances may MAP lapse an application?: MAP may stop reviewing—i.e., lapse—an application if, absent a showing of good cause, the applicant fails to: (1) respond fully within the applicable timeframes for initial or subsequent written requests for information or documents for NMAs or CMAs, as applicable; (2) appear at, or otherwise participate in, a scheduled membership interview; or (3) file an executed membership agreement within 25 days after service of the agreement.
8. If an application is at risk of lapse, does the applicant have an opportunity to address the deficiency before MAP lapses the application?: Yes. MAP may, its discretion, provide the applicant an opportunity to remediate the circumstances that give rise to a potential lapse. If the deficiencies are not corrected, MAP may lapse the application. Once lapsed, the applicant will have to submit a new application for the request.
9. May an applicant appeal MAP’s decision to lapse an application?: No. A lapsed application cannot be appealed because it does not constitute final action by FINRA for purposes of pursuing further review of MAP’s decision in accordance with Rule 1015 (Review by National Adjudicatory Council). Once lapsed, the applicant will have to submit a new application and fee pursuant to Schedule A to the FINRA By-Laws. There is no refund of any fee for a lapsed application.

Application Withdrawal

10. What may an applicant do if it decides not to go through the application process?: An applicant may withdraw its application at any time during the review process. If an applicant does so within 30 days after filing it, FINRA will refund the application fee, less a $500 processing fee. If the applicant subsequently decides to seek membership (new or continuing), the applicant will need to submit a new application and fee pursuant to Schedule A to the FINRA By-Laws. There is no refund of any fee for an application withdrawn after 30 days of filing.

Re-Submission of Applications That Are Rejected, Lapsed or Withdrawn

11. If an NMA is rejected, lapsed or withdrawn, how can the applicant refile an NMA?: If an NMA is rejected, lapsed or withdrawn the prospective member will have to submit a new NMA for proposed membership with a new CRD number and BD name for the proposed member. A prospective member seeking membership cannot reinitiate the NMA process using the same BD name and CRD number as was used for the NMA that was rejected, lapses or withdrawn.
12. What are the consequences of an applicant’s decision to withdraw, or MAP’s decision to lapse or reject, a CMA for an ownership change that has been effected?: Under FINRA Rule 1017(c)(1), an applicant may effect an ownership change 30 days after submission of an application, even if MAP has not issued a decision on the application. If a CMA for an already-effected ownership change is subsequently denied or lapsed (and all appeals are exhausted or waived), within 60 days¹ of the denial or lapse, the applicant will be required to: (1) submit a new application and fee for the requested ownership change; (2) unwind the ownership change; or (3) file a Form BDW (Uniform Request for Broker-Dealer Withdrawal) to withdraw the applicant’s broker-dealer registration from the U.S. Securities and Exchange Commission (“SEC”), self-regulatory organizations, including FINRA, and appropriate jurisdictions.

NMAs and CMAs: Timing Considerations

13. What does it mean if an application is processed under fast-track timeframes?

Under certain circumstances subject to MAP’s discretion, an application may qualify for fast-track review, which operates under more compressed timeframes. For NMAs, the fast-track review period is about 100 days, as opposed to 180 days specified under Rule 1014 (Department Decision) and Rule 1017. For CMAs, the fast-track timeframe is about 75 days, as opposed to 180 days for regular review. Considerations for the availability of fast-track include whether:

The application poses complex or novel issues or multiple business lines are involved;
The implementation of the business model requires interpretative guidance prior to approval;
All proposed principals have obtained the appropriate securities licenses;
All proposed principals have demonstrated that they have the required relevant experience;
Any proposed key personnel have disciplinary history;
The applicant’s written supervisory procedures (WSPs) are adequate and tailored to the firm’s business;
The applicant or its associated persons have unpaid or pending arbitrations awards.

If an application is eligible for fast-track review, the applicant must agree in writing to abbreviated turnaround times (10 business days) for responding to MAP’s requests for information and documents.

14. May an application that began under the fast-track review process subsequently shift to a review process that follows the standard timeframes specified under the MAP rules?

Yes. MAP may determine that an application that was initially deemed eligible for fast-track to shift to the regular review for several reasons. Such reasons include an applicant’s inability to meet the fast-track timeframes, material changes to the application, or missing attributes of the application, such as proper licensing for principals or an operationally ready mobile application or online platform.

15. What is the impact on the review of an application if the applicant’s personnel have not yet acquired all required licenses?

An application in which the applicant’s personnel have not yet acquired the required licenses will not be eligible for fast-track review. A delay in the applicant’s personnel in obtaining the required licenses may delay MAP’s ability to render a decision approving the application or may result in the denial of the application.

16. What is the impact of changes to business plans, operations, or key personnel on the application review process?

Material changes in the areas listed above may impact MAP’s determination on the applicant’s ability to meet FINRA Rule 1014(a)(1) (Standard 1) resulting in a denial of the application. Other impacts may involve delays or if an application is under fast-track review, such application would shift to a review under the standard timeframes set forth under the MAP rules.

NMAs and CMAs: Decision Outcomes; Appeal of Decision

17. What are the possible outcomes for an application once it is deemed “filed”?: An application may be: (1) approved; (2) approved with restrictions; or (3) denied.
18. On what bases can MAP deny an application or impose a restriction?: MAP may deny an application or impose a restriction, if the applicant does not meet one or more of the 14 Standards of Admission (Standards) in FINRA Rule 1014(a). Alternatively, if the application requests a specific type of activity, MAP may restrict the approval and membership agreement to the type of activity being requested. Additionally, an interim restriction may be placed on an application for approval of an ownership change or control. FINRA Rules 1017(c) and 1017(b)(2)(B) provides further information on the imposition and removal of such restrictions.
19. As described in FINRA Rule 1014(a)(3)(C), one factor that triggers the rebuttable presumption to deny an application is the existence of specified regulatory events. Would the presumption still be triggered even though the event is aged?: Yes. The presumption of application denial under FINRA Rule 1014(a)(3)(C) would be triggered irrespective of the age of the regulatory event, but MAP may take age into account in determining whether the presumption is overcome.
20. Is there any recourse if an application is denied or approved with restrictions?: Yes. An application that is denied or an application that is approved with restrictions are considered FINRA final actions. Consequently, an applicant may request a review of MAP’s decision with the National Adjudicatory Council (NAC), and, beyond the NAC, may apply for review by the US Securities and Exchange Commission (SEC) in accordance with Rule 1019 (Application to the SEC for Review).

NMAs and CMAs: Documentation

21. When can I submit an attestation, as opposed to governing documents, for direct and indirect owners?: Currently, the threshold for requesting documentation pertaining to ownership in a broker-dealer is at or above 10%. In such instance, MAP will typically request that the applicant provide copies of the governing documents for each entity holding an ownership interest in the applicant, where governing documents include operating agreements, by-laws, or partnership agreements. For ownership interests below this 10% threshold, in lieu of such documentation, an applicant may provide standard attestations pertaining to the applicant’s due diligence performed on such owners.
22. Can an unregistered, natural person own a broker-dealer?: Yes, however, the proposed owner will need to submit an attestation stating that such person will not act in a control or supervisory capacity and will not engage in the applicant’s securities business or day-to-day activities, which would require registration and licensing pursuant to FINRA’s rules.
23. Does MAP accept redacted documents?: No. MAP requires all documentation be legible and unredacted.
24. Are the documents submitted with my application confidential?: MAP understands the confidential nature of documents submitted and treats all documents as such. If an applicant wishes to submit a password protected document, they may do so and provide the password to staff directly.
25. What does it mean for an applicant to have an “operationally ready” mobile platform, online application, or trading platform, such as an Alternative Trading System (ATS)?: In general, “operationally ready” means that the version of the platform to be used in the conduct of its securities business is complete at the time that the application is submitted to FINRA, which includes, but is not limited to, all quality assurance and similar testing and all proposed broker-dealer functions vis-à-vis use of the platform in the conduct of the applicant’s business. The applicant should be prepared to conduct the demonstration of its platform via videoconference on the day the application is submitted as well as provide screenshots of all relevant components as of the date of the application submission to FINRA. This, at a minimum, includes: (1) a customer onboarding and the entire life cycle of a transaction from inception to completion, including clearance and settlement, as applicable; (2) an internal supervisory and operational review of components; and (3) a “customer-facing” view of the system. The failure to provide evidence of an operationally ready mobile platform, online application, or trading platform may result in rejection of the application as substantially incomplete, lapse of the application, or denial of the application under Standard 6 of FINRA Rule 1014(a)(6) (Department Decision).
26. What documents need to be submitted in support of new entity owners?: MAP requires the submission of formation documents, such as certification of incorporation and certificates of formation, in addition to governing documents, such as by-laws and corporate agreements.
27. Are all schedules, exhibits, disclosure schedules, and financing documentation, such as promissory notes, required when submitting documents to MAP?: Yes. MAP requires the submission of all documents related to a proposed transaction in order to fully understand the transaction as well as meet the requirements of Standard 1 (see FINRA Rule 1014(a)(1)).
28. Are statements in foreign currency accepted as part of an application?: No. All statements must be converted or reflected in US dollars.
29. If an application involves documents written in a language other than English, must those documents be translated?: Yes. All documentation in languages other than English must be translated by a certified third-party professional translator in order to meet the requirements of Standard 1 (see FINRA Rule 1014(a)(1)).
30. What documentation is required when submitting bank statements?: An applicant must submit all pages of each bank statement. Bank statements must be unredacted. Screenshots will not be accepted. In addition, an applicant must submit statements from its owners, investors, capital raises, or any other funding source, in addition to bank statements for relevant parties involved in funding for the month of infusion as well as the prior three months.
31. How may an applicant demonstrate financial wherewithal?: At a minimum, an applicant must demonstrate sufficient funding for the first 12 months of fixed-income expenses and 120% of its minimum net capital requirements (MNCR). The applicant must provide supporting documentation to evidence that it has sufficient capital to meet 120% of MNCR and the fixed income expenses, such as current net capital computation, bank statements, and proformas.
32. Do I need to submit executed documents?: No. MAP accepts draft agreements as circumstances necessitate, but any submitted draft agreements should be as complete as possible before submitting to MAP. Material changes to previously submitted draft agreements may result in delays in an application’s approval or may result in denial of the application under Standard 4 in FINRA Rule 1014(a)(4) (Department Decision). If an applicant submits changes to a previously submitted draft agreement, the amended draft agreement should be redlined to identify changes.

Fee waivers

33. Are fee waivers available for CMAs?: Yes. Section 4(i)(3) under Schedule A to the FINRA By-Laws sets forth the circumstances under which the fee for an application for a CMA may be waived. Regulatory Notice 13-11 describes the process for this waiver. Fee waivers are not available for NMAs.

Materiality Consultations (MatCons)

34. If I submit a MatCon, and MAP determines that the events, as described, is material and requires an application, can MAP process the application through the MatCon process?: No. If MAP determines that a proposed change is material, a CMA must be filed in accordance with FINRA Rule 1017.

FINRA Compliance Tool Disclaimer

This optional tool is provided to assist member firms in fulfilling their regulatory obligations. This tool is provided as a starting point, and you must tailor this tool to reflect the size and needs of your firm. Using this tool does not guarantee compliance with or create any safe harbor with respect to FINRA rules, the federal securities laws or state laws, or other applicable federal or state regulatory requirements. This tool does not create any new legal or regulatory obligations for firms or other entities.

Updates

This tool was last updated on June 28, 2024. This tool does not reflect any regulatory changes since that date. FINRA periodically reviews and updates these tools. FINRA reminds member firms to stay apprised of new or amended laws, rules and regulations, and update their WSPs and compliance programs on an ongoing basis.

Additional Guidance

Member firms seeking additional guidance on certain regulatory obligations should review the Broker-Dealer Registration Topic Page and other relevant FINRA Topic Pages. Applicants are also encouraged to avail themselves of MAP’s pre-filing meeting process by contacting MAP by email or 212-858-4000 – Option 5 – Membership Applications.

Staff Contacts

FINRA’s Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see Interpreting the Rules for more information.

OGC staff contacts:

Kosha Dalal and Sarah Kwak
1700 K Street, NW
Washington, DC 20006
(202) 728-8000

MAP staff contacts:

Jante Turner
(202) 728-8317

MAP Intake
(212) 858-4000 (Option 5 – Membership Applications)

¹ For the protection of investors, MAP may shorten the 60-day period. Alternatively, for good cause shown, MAP may lengthen the 60-day period.