Introduction

Welcome to Broker-Dealer Registration: the rules that decide which firms must register, with whom, on what forms, and what happens when registration is misused or terminated.

Exam Weight: Part of 6% (~9 questions across Function 1)

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What You'll Learn

In this unit, you'll cover:

  • Statutory Definitions and Registration Trigger: The Securities Exchange Act (SEA) defines a broker as an agent effecting securities transactions for others and a dealer as a principal buying and selling for its own account; the Act makes SEC registration mandatory before any interstate securities business
  • Three-Tier Registration Framework: How a broker-dealer (B/D) registers with the SEC, joins a self-regulatory organization (SRO) such as FINRA, and registers with applicable states, all through a single Form BD filing on the Central Registration Depository (CRD)
  • Registration Forms (BD, BDW, BR): The Uniform Application for Broker-Dealer Registration, the Withdrawal form, and the Branch Office Registration form, plus the recordkeeping rules that govern them
  • FINRA Membership and Continuing Membership: The New Member Application (NMA) and its 14 Standards of Admission, the Continuing Membership Application (CMA) triggered by material changes in ownership or operations, and FINRA By-Laws Article IV (including the 2-year retention of jurisdiction)
  • Sanctions, Misrepresentation, and SIPC: SEC sanctioning authority over broker-dealers (firm-level) and associated persons (individual-level), the prohibition against representing SEC registration as a government endorsement, and automatic Securities Investor Protection Corporation (SIPC) membership

Why This Matters

The Series 24 exam tests three angles:

  • When a firm must register, what form covers which event, and how FINRA's jurisdictional reach survives a firm's withdrawal
  • As a principal, you supervise registration filings and make sure the firm's representations to customers about registered status don't imply SEC approval or endorsement
  • Get these rules wrong in practice and you face SEC enforcement; get them wrong on the exam and you lose easy points in Function 1

Let's start with the statutory definitions of broker and dealer that trigger the registration requirement.