[ by Howard Haykin] FINRA hopes to streamline the member application process, with changes that go into effect later this month.  Both prospective new members and continuing members are affected. What Is Changing - Revised Form NMA. Starting Monday, 7/23, all prospective applicants for FINRA membership must use the newly amended Form NMA - pursuant to NASD Rules 1012 (General Provisions) and 1013 (New Member Apps and Interviews). A completed Form NMA must be submitted electronically as part of their new member application.  and The standardized online Form NMA was first introduced in 2008, to streamline the new member application process and to assist applicants  assist applicants in compiling a complete application package by identifying and organizing the information and supporting documentation required by NASD Rule 1013 into eight major sections: (i) General Information;  (ii) Business Lines;  (iii) Personnel;  (iv) Net Capital and Sources of  Funding;  (v) Contractual and Business Arrangements;  (vi) Policies and Procedures;  (vii) Facilities; and  (viii) Recordkeeping System. To further streamline the application process, the newly revised Form NMA now is organized according to the 12 standards for membership enumerated in NASD Rule 1014 (Department Decision).   Form NMA also was revised to group information requests on specific topics that currently are located throughout existing Form NMA, as well as to reduce current duplicative information requests in Form NMA. What is Changing - New Form CMA. NASD Rule 1017 provides that certain changes in a member firm’s ownership, control or business operations require a continuing membership application. Currently, NASD Rule 1017 doesn't require a continuing membership applicant to submit a standardized form as part of its continuing membership application and provides little detail regarding an application’s required contents. Instead, each applicant is responsible for determining the contents of its continuing membership application.  NASD Rule 1017 also generally requires a continuing membership application to be filed in the district office in which an applicant’s principal place of business is located.  Furthermore, the current rule permits applicants to submit continuing membership applications by mail and other hard-copy methods - all of which are inefficient and slow down the process. To streamline this process, FINRA amended NASD Rules 1012 and 1017(b) to require continuing membership applicants, when filing an application, FINRA now will require  a completed Form CMA as part of the contents of a continuing membership application. New Form CMA is structured, similarly to the revised Form NMA, according to the 12 standards for membership enumerated in NASD Rule 1014, with adjustments in the content of Form CMA based on the differing nature of the application types.  The new form will provide continuing membership applicants with the benefits of a streamlined application process that new member applicants currently experience via the standardized online Form NMA and is intended to reduce administrative delays that exist in today’s manual application processes. New User Friendly Features of Forms NMA and CMA. The forms will provide new user-friendly features to reduce the administrative burden.   Specifically, those features include:

• pre-populating certain fields in both forms with information provided to FINRA in other submissions - e.g., CRD entitlement forms and Form BD - or otherwise available to FINRA from CRD records  - e.g., CEP status - thereby minimizing the time necessary for applicants to complete the new forms;

• certain information fields in revised Form NMA requesting information that  applicants are currently required to provide during FINRA’s review of the new member application that were not included in current Form NMA but rather obtained during application review through requests from FINRA for additional information. These information fields, which FINRA added based on industry and staff feedback on existing Form NMA and the new member application process, should reduce the need for extensive follow-up during the review process which currently results in processing delays;  and

• optional information request fields in both forms that can be used by applicants to provide additional information if and when it is applicable to an applicant’s proposed business activities, structures or circumstances. The optional field approach is intended to provide flexibility for the significant level of variation seen in member firms’ structures, business lines and proposed changes.

Information Requested by Forms NMA and CMA. FINRA provides a synopsis of the information requests, by standard, of revised Form NMA (and the nexus to existing Form NMA information requests) and new Form CMA: Standard 1 (Overview of the Applicant) NASD Rule 1014(a)(1) requires Member Regulation to consider whether a new member or continuing membership application and all supporting documents are complete and accurate.

Form NMA: Information fields request certain new member applicant overview information currently contained primarily in Sections I (General Information), II (Business Lines) and VII (Facilities) of existing Form NMA (e.g., formation information, identification of business activities, types of customers (and/or counterparties), owners, officers, directors and control persons, validation of clearing arrangements).

Form CMA: Information fields request certain continuing membership applicant overview information relevant to the proposed business change, such as details of the proposed change, verification of current business activities, new business lines added, supervisors for new business lines and identification of other persons associated with the proposed business change.

Standard 2 (Licenses and Registrations) NASD Rule 1014(a)(2) requires Member Regulation to consider whether an NMA or CMA applicant and its associated persons have all licenses and registrations required by state and federal authorities and self-regulatory organizations (SROs).

Form NMA: Information fields request relevant information regarding a new member applicant’s licenses and registrations (e.g., required licenses and registrations, two principal requirement waiver, other SRO registrations) that is currently contained primarily in Sections I (General Information) and III (Personnel) of existing Form NMA, as well as incorporating additional information requests (e.g., intent to claim exemptions from registration or seek examination waivers for personnel) that are necessary for the applicant to demonstrate compliance with this standard.

Form CMA: Information fields request relevant information regarding a continuing membership applicant’s licenses and registrations - e.g., changes to required licenses and registrations, new or continuing registration or examination waivers, new or continuing two-principal requirement waiver, other SRO registrations and/or withdrawals from other SRO registrations and new non-registered officers, directors or control persons that are necessary, in light of the proposed business change, for a continuing membership applicant to demonstrate compliance with the standard.

Note to Readers. C-I is signing off at this point, because the level of detail should be read directly from FINRA's pronouncement.  We'll simply list out the remaining standards, and provide a link below to the Regulatory Notice.

• Standard 3 (Compliance with Securities Laws, Just and Equitable Principles of Trade)
• Standard 4 (Contractual and Business Relationships)
• Standard 5 (Facilities)
• Standard 6 (Communications and Operational Systems)
• Standard 7 (Maintaining Adequate Net Capital)
• Standard 8 (Financial Controls)
• Standard 9 (Written Procedures)
• Standard 10 (Supervisory Structure)
• Standard 11 (Books and Records)
• Standard 12 (Continuing Education)

For further details, go to:   [FINRA RegNote 12-33, July 2012].