To become a broker-dealer in the United States, you register the firm with the Securities and Exchange Commission on Form BD, join the Financial Industry Regulatory Authority (FINRA) through its New Member Application, register in every state where you plan to do business, and put the required people, capital, insurance, and written procedures in place before FINRA will let you open for trading. Start to finish, plan on six months to more than a year.
The process rewards sequencing. You cannot file a credible application without the personnel already lined up, and you cannot pass the review without the capital, bonds, and compliance systems in place. Here is how the pieces fit together.
Line Up Your Personnel First
FINRA membership hinges on people as much as paperwork. Their exam results and background disclosures are part of the application, so hiring or designating them is step one.
Two Principals
Most firms must designate at least two officers or partners as General Securities Principals, each of whom has passed the Series 24 exam.1FINRA.org. FINRA Rule 1210 – Registration Requirements Principals supervise the securities business and carry responsibility for the firm’s conduct. A firm limited to a narrow product line may instead register principals in a category matching its scope.
Registered Representatives
Every employee involved in securities sales, trading, or related activities must register. The standard path is passing both the Securities Industry Essentials (SIE) exam and the Series 7 General Securities Representative exam, which are corequisites for a General Securities registration.2FINRA.org. Series 7 – General Securities Representative Exam Most states also require the Series 63 for anyone selling securities through a broker-dealer; firms that offer advisory services may need the Series 65 or the combined Series 66.3North American Securities Administrators Association. Exam FAQs
Chief Compliance Officer and FINOP
You need a Chief Compliance Officer responsible for the firm’s compliance program, and a Financial and Operations Principal (FINOP) responsible for financial reporting and net capital monitoring. A FINOP at a firm that clears and carries customer accounts passes the Series 27; a FINOP at an introducing-only firm passes the Series 28.
Form U4, Background Checks, and Fingerprints
Each associated person files a Form U4 through the Central Registration Depository (CRD), disclosing criminal history, regulatory actions, civil litigation, customer complaints, and financial events such as bankruptcies.4FINRA.org. Form U4 – Uniform Application for Securities Industry Registration Anyone who handles funds or securities, or has access to the firm’s books and records, must submit fingerprints to the FBI.5GovInfo. 17 CFR 240.17f-2 – Fingerprinting of Securities Industry Personnel Narrow exemptions exist for employees who don’t sell securities, access customer funds, or supervise anyone who does.
Meet the Capital, Bonding, and SIPC Requirements
Under the SEC’s Net Capital Rule (Rule 15c3-1), the minimum liquid capital you must hold depends on what your firm does:
- $250,000 if you carry customer accounts, clear transactions, or hold customer funds or securities.6FINRA. SEA Rule 15c3-1 and Related Interpretations
- $50,000 if you introduce customer accounts and receive (but don’t hold) customer securities.
- $5,000 if you neither receive nor hold customer funds or securities.
Those are floors. The actual requirement can be higher depending on your liabilities, and dropping below your required level at any time obligates you to stop doing business and notify regulators immediately.
Every FINRA member that belongs to the Securities Investor Protection Corporation (SIPC) must also carry a fidelity bond covering employee dishonesty, forgery, and fraudulent trading. Minimum coverage scales with your net capital requirement.7FINRA. Regulatory Notice 11-21 – SEC Approves FINRA Rule 4360
SIPC membership itself is mandatory for almost every registered broker-dealer. SIPC covers up to $500,000 per customer of a failed firm, with a $250,000 sublimit for cash claims, and funds itself through assessments on member firms — the 2026 rate is 0.15 percent of net operating revenues.8SIPC. Assessment Rate Firms doing business only outside the U.S., or limited entirely to investment company shares, variable annuities, or insurance, may qualify for exemption.9U.S. Securities and Exchange Commission. Guide to Broker-Dealer Registration
Assemble the Application
Form BD
Form BD, the Uniform Application for Broker-Dealer Registration, is the core filing. It collects your firm’s legal structure, every direct or indirect owner holding 5 percent or more of the equity, and any past legal or disciplinary matters involving the firm or its control affiliates. Once filed, you must update Form BD within 30 days of any change to the information on it.
Business Plan
FINRA expects a detailed business plan describing projected revenues, operating costs, sources of capital, and the basis for those projections.10FINRA.org. Standards for Admission Reviewers look for realistic assumptions backed by concrete data — target market, specific products, and a credible path to staying above net capital minimums.
Written Supervisory Procedures
Draft Written Supervisory Procedures (WSPs) that spell out how the firm will monitor employee conduct and comply with securities laws. Your supervisory system must designate registered principals to review transactions in the firm’s securities business.11FINRA. FINRA Rule 3110 – Supervision WSPs typically cover trade surveillance, communications retention, complaint handling, and detection of insider trading or market manipulation.
Where You File and What It Costs
Form BD is submitted through FINRA’s Web CRD system, which is the central database for the securities industry.12Investor.gov. Central Registration Depository (CRD) Filing through Web CRD automatically creates the corresponding SEC record in EDGAR, so a separate SEC filing isn’t required.13U.S. Securities and Exchange Commission. Maintain and Update Company Information Any branch offices are registered separately through Form BR.
The FINRA New Member Application (NMA) fee is tiered by headcount. For 2026–2027:
- 1–10 registered persons: $7,500
- 11–100: $12,500
- 101–150: $20,000
- 151–300: $25,000
- 301–500: $30,000
- 501–1,000: $35,000
- 1,001–5,000: $45,000
- More than 5,000: $55,000
A firm that will engage in any clearing and carrying activity pays an additional $5,000 on top of the applicable tier.14FINRA.org. Section 4 – Fees Those fees cover the FINRA application only. Budget separately for legal counsel, technology, office space, compliance systems, and state fees.
The 180-Day Review and Membership Interview
Once FINRA receives a substantially complete application, it has 180 calendar days to process it. Expect written requests for additional information. You have 60 calendar days to respond to the first request and 30 calendar days for each one after that. Missing a deadline can cause FINRA to reject, lapse, or deny the application, sending you back to the start.15FINRA. How to Become a Member – Membership Application Time Frames
Before deciding, FINRA holds a membership interview with firm leadership to walk through the business plan, compliance protocols, and supervisory procedures. If your firm operates an electronic platform, be ready to demonstrate customer onboarding, transaction flow through settlement, trade reporting, and risk controls in real time.16FINRA.org. Guidance for New Member Applications If FINRA approves, it issues a written decision and a Membership Agreement specifying exactly which securities activities you are authorized to conduct. You cannot begin operating until that agreement is signed and your firm is registered in the CRD.
Register in Every State Where You’ll Operate
SEC and FINRA registration by themselves don’t let you do business. You also need to register as a broker-dealer in each state and U.S. territory where you plan to operate or solicit customers. Fees vary by state — roughly $30 to $400 for the firm, and often $35 to $150 per registered agent — and some states impose their own exam and documentation requirements on top of FINRA’s.17FINRA.org. Applicant Registration Requirements A nationwide firm sees those numbers add up fast.
What You’re Signing Up For After Approval
Approval starts, rather than ends, your compliance obligations. Every FINRA member must maintain a written anti-money laundering program approved by senior management, with procedures to detect and report suspicious transactions, a customer identification program, ongoing due diligence, annual independent testing, and staff training.18FINRA.org. Anti-Money Laundering, Fraud and Sanctions You’ll file periodic FOCUS Reports (Form X-17A-5) with the SEC and FINRA and engage a PCAOB-registered accounting firm for an annual audit.19Reginfo.gov. Supporting Statement – Rule 17a-5 Every registered person must complete the annual Regulatory Element of continuing education for each registration category they hold, and the firm must run its own Firm Element training plan and hold an annual compliance meeting with every registered representative and principal.20FINRA.org. FINRA Rule 1240 – Continuing Education
Who May Not Need Full Broker-Dealer Registration
Two narrow paths sit outside the full process. A funding portal that facilitates only Regulation Crowdfunding offerings under Section 4(a)(6) of the Securities Act registers instead by filing Form Funding Portal with the SEC and joining FINRA as a funding portal member.21eCFR. 17 CFR Part 227 Subpart D – Funding Portal Regulation In exchange, a portal cannot offer investment advice, solicit purchases or sales, or hold customer funds or securities.
Separately, a 2022 statutory exemption lets M&A brokers facilitate ownership transfers of eligible privately held companies without SEC registration, provided they don’t hold customer funds or securities, don’t handle public offerings, don’t work on shell-company transactions, and don’t represent both sides without written disclosure and consent. The target company must also fall below specified earnings and revenue thresholds, which are periodically adjusted for inflation.22Office of the Law Revision Counsel. 15 USC 78o – Registration and Regulation of Brokers and Dealers
The Cost of Skipping Registration
Willfully violating the Exchange Act’s registration requirements exposes an individual to fines of up to $5,000,000 and imprisonment of up to 20 years; for entities, the maximum fine rises to $25,000,000.23Office of the Law Revision Counsel. 15 USC 78ff – Penalties The SEC can also seek civil injunctions, disgorgement, and administrative bars, and certain outcomes trigger a statutory disqualification that keeps a person from associating with any registered broker-dealer in any capacity.