Who Needs FINRA Compliance
FINRA membership is required for any firm that acts as a broker-dealer in the United States — meaning any firm that buys or sells securities on behalf of customers or for its own account. If your firm is registered with the SEC as a broker-dealer, you are a FINRA member and subject to its full rulebook.
Who Must Be a FINRA Member
Under Section 15(b) of the Securities Exchange Act of 1934, any firm that acts as a broker or dealer in securities must register with the SEC and become a FINRA member (or a member of another SRO, though FINRA is the dominant SRO for broker-dealers).
Firms that must be FINRA members include:
- Full-service broker-dealers that execute trades and provide investment advice
- Discount broker-dealers and online trading platforms
- Clearing and carrying firms that hold customer assets and settle trades
- Introducing broker-dealers that bring customer accounts to clearing firms
- Market makers that provide liquidity in securities markets
- Investment banks that underwrite securities offerings
- Dually registered firms that operate as both broker-dealers and investment advisers
Who Is NOT Required to Be a FINRA Member
FINRA membership is specific to broker-dealers. The following are generally NOT required to be FINRA members:
- Registered Investment Advisers (RIAs) regulated solely by the SEC or state securities regulators (though if they also operate a broker-dealer, that entity must be registered)
- Banks that buy and sell securities in limited circumstances may qualify for exemptions
- Insurance companies unless they operate a broker-dealer subsidiary
- Hedge funds and private equity funds that do not act as broker-dealers
Registered Representatives
Individual securities professionals — salespeople, traders, analysts, and others who work for FINRA member firms — must be registered with FINRA as “registered representatives.” They must pass qualifying examinations (Series 7, Series 63, etc.), complete continuing education requirements, and are subject to FINRA’s conduct rules personally, not just through their firm.
What Compliance Obligations Apply
Once your firm is a FINRA member, you are subject to:
- FINRA’s complete rulebook, including conduct rules, operational rules, and financial rules
- SEC regulations that FINRA enforces on the SEC’s behalf
- FINRA examination — routine and for-cause examinations of your firm’s practices, records, and controls
- Annual reporting — FINRA requires member firms to file various periodic reports, including the annual Form BD amendment
- Cybersecurity controls as assessed during examinations, consistent with FINRA’s published guidance
How Espresso Labs Helps
Espresso Labs manages the cybersecurity and IT controls that FINRA examiners assess — giving your firm examination-ready documentation, continuously enforced technical controls, and evidence of an active cybersecurity governance program without requiring you to build a large internal security team.