Introduction

Welcome to Broker-Dealer Definition and Registration: the rules that determine which firms must register with the state and how the registration process works.

Exam Weight: 12% (7 questions, shared with Unit 4)

What You'll Learn

In this unit, you'll cover:

• Definition of a Broker-Dealer: What makes a firm a broker-dealer, who is excluded, the no-place-of-business rule, and Canadian broker-dealer (BD) limited registration
• Registration and Post-Registration Requirements: Form BD, consent to service of process, effective dates, net capital, and recordkeeping
• Denial, Revocation, Suspension, Cancellation, and Withdrawal: Grounds for action, the public interest standard, cancellation vs. revocation, and withdrawal procedures
• Broker-Dealer Supervision: FINRA Rule 3110, written supervisory procedures, office designations, annual compliance reviews, and supervisory liability

Why This Matters

Before anyone can sell a security in a state, the firm behind them must be properly registered. The Series 63 tests whether you understand who qualifies as a broker-dealer, what the registration process requires, and what happens when firms fail to meet their obligations. These concepts appear not only in direct questions about broker-dealers but also in scenarios involving agents, exemptions, and administrator enforcement powers.

Understanding the broker-dealer (BD) framework first makes the agent registration rules in the next chapter much easier. Agents work for BDs, so the BD rules set the foundation.

Let's start with what makes a firm a broker-dealer under the Uniform Securities Act.