7.2.1.4. FINRA Membership
The Exchange Act requires every broker-dealer to be registered with a national securities association (unless it is a member of a securities exchange). FINRA is the only such association.
The following documents must accompany an application for FINRA membership. They are all found on FINRA’s Firm Gateway system, a web-based tool that provides ready electronic access to FINRA compliance and registration forms and submissions.
New member agreement (Form NMA). On the NMA, the applicant identifies its ownership and organizational structure (from Form BD), its intended business activities, its settlement and clearing procedures, and its communications and operations systems. The applicant must identify every associated person in the firm and their responsibilities and disciplinary history, as well as all other personnel and consultants. It must compute its net capital; provide a balance sheet, projected expenses, and revenue for the first year; and identify the nature and source of its capital. It must provide the names of its accountant and auditor and the amount of its fidelity bond coverage. It must provide information from its business continuity plan, including the location of its data backup system and alternate communications plans for customers and employees. It must identify the addresses of all branch offices, the persons in charge, and their business activities. It must identify its recordkeeping system and the technology used; if using a service bureau, it must provide the bureau’s name and identify the records it will create and maintain.
Business plan. A business plan must be attached to the NMA. This plan must document the applicant’s present and future financial position and provide a marketing plan, its organizational structure, its present and future sources of capital, and the technologies to be employed.
Form U4. This form must be filed for each of the broker-dealer’s registered employees. Form U4 cont