Registration
To sell securities, you must be associated with a broker-dealer. In addition to FINRA registration under the Securities Exchange Act, both the broker-dealer firm and its employees (also referred to as agents or registered representatives) must be registered with each state where they transact business under the Uniform Securities Act.

This act is basically a model for state securities rules, often referred to as Blue Sky Laws. It was created in the 1950s so that broker-dealers and investment advisers could operate in multiple states without having to fulfill different requirements in each state.

The Registration Process
The registration process is essentially the same for broker-dealers, agents, investment advisers, and investment adviser representatives. However, instead of the Investment Advisor Registration Depository (IARD) system, broker-dealers and agents use the Central Registration Depository (CRD) system. While IAs use the IARD, their investment adviser representatives also use the CRD.

You can visit the Central Registration Depository by clicking here.

To register, the applicant must file an application along with the consent to service of process and a filing fee. In addition, there may be a minimum net capital requirement and/or a bond to cover potential legal costs.

States may not establish requirements which exceed the federal requirements in these areas:

  • Record keeping
  • Bonding
  • Margin
  • Net capital
  • Financial responsibility
  • Custody of securities


Exam Tips and Tricks
Most likely, questions about broker-dealer regulation under the Uniform Securities Act will include investment advisers as well. For example:

  1. The state administrator can require the filing of an application, the consent to service of process and a filing fee from all of the following EXCEPT:
    1. An investment adviser
    2. An investment adviser representative
    3. A federal covered adviser
    4. A broker-dealer registered representative

The correct answer is "c", since the administrator cannot require an application from a federal covered adviser but does have jurisdiction over broker-dealers and their representatives who do business in the state.



Securities Regulation

Related Articles
  1. Investing

    Top 25 Broker-Dealer Firms of 2017

    Interested in finding a Broker-Dealer? Here's the ranking of the largest broker-dealers by assets under management.
  2. Financial Advisor

    Series 63 Exam Prep: The Broker-Dealer

    Before you take the series 63, you need to understand jurisdiction and how it affects broker-dealers.
  3. Financial Advisor

    The Pros & Cons of Partnering with a Broker/Dealer

    Financial advisors must determine a business model that meets their needs and meets the expectations of their clients.
  4. Personal Finance

    Working For An Independent Broker-Dealer Vs. A Big Bank

    Here is an overview of what broker-dealers and big banks have to offer to employees and the different opportunities available.
  5. Financial Advisor

    Question the Funds Picked By Your Financial Advisor

    Learn the importance of having a financial adviser whom you can trust and why questioning the funds he selects is part of that process.
  6. Financial Advisor

    Succeeding At The Series 63 Exam

    Your career as a securities agent begins with this test. We'll show you how to score high.
  7. Financial Advisor

    How Brokers Are Compensated for Selling Bonds

    Find out how brokers are paid for selling bonds and how the transaction costs are passed on to the investor through a markup or commission.
  8. Tech

    How the New Fiduciary Rule Will Hit Broker-Dealers

    While the new rules are likely to impact all financial advisors, it is expected that those in the brokerage world will be hit the hardest. Here's why.
  9. Financial Advisor

    Should You Add A Securities License To Your Qualifications?

    Clients love planners who sell securities, but a securities license takes a lot of work. Learn if the stress and study are worth it.
  10. Financial Advisor

    Why the Fiduciary Rule Might Drive Fees Back Up

    The DoL’s new fiduciary rule will have a big impact upon the fee structure that is used by many broker-dealers, and clients could end up paying more.
Frequently Asked Questions
  1. Where else can I save for retirement after I max out my Roth IRA?

    The first option to explore is to determine if you can contribute to a 401(k), 403(b), or 457 plan at work. If your employer ...
  2. How did George Soros "break the Bank of England"?

    In Britain, Black Wednesday (September 16, 1992) is known as the day that speculators broke the pound. They didn't actually ...
  3. What counts as "debts" and "income" when calculating my debt-to-income (DTI) ratio?

    It's important to know your debt-to-income ratio because it's the figure lenders use to measure your ability to repay the ...
  4. Who are Monsanto's main competitors?

    Learn about Monsanto Company's two main operating divisions and its main competitors within each sector, including The Mosaic ...
Trading Center