broker-dealer registration

Section 15(b) of the Securities Exchange Act of 1934 (the Act) requires registration of any broker-dealer effecting securities transactions by means of interstate commerce unless an appropriate exemption is available. In order to register as a broker-dealer in the United States, an application for registration—called Form BD—must be made to the SEC and a self-regulatory organization (SRO), which, in most instances, will be the Financial Industry Regulatory Authority (FINRA).

Form BD asks questions about the background of the broker-dealer and its principals, controlling persons, employees, affiliates, parent entities and subsidiaries. The broker-dealer must meet the statutory requirements to engage in a business that involves high professional standards, and quite often includes the more rigorous responsibilities of a fiduciary. Form BD is filed on FINRA’s Central Registration Database, an online system designed by FINRA and the state regulators to centralize broker-dealer registration. Once filed, the SEC has 45 days to issue an order granting registration or institute a proceeding to determine whether registration should be denied. The SEC does not charge a fee for filing Form BD.Continue Reading Steps to Becoming a Broker Dealer