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← Series 63: Regulation of Broker-Dealers & Agents
Series 63 practice questioneasyFINRA Membership and Broker-Dealer Registration

A newly formed broker-dealer in State Y applies for registration with both the state and FINRA. Which of the following statements is TRUE regarding its ability to conduct business in State Y?

  1. AIt may begin business as soon as it files registration documents with the state.
  2. BIt may begin business only after both state and FINRA registrations are effective.✓ Correct answer
  3. CIt may begin business upon approval from either the state or FINRA, whichever is first.
  4. DIt does not need state registration if it has FINRA membership.
Explanation

Why B — It may begin business only after both state and FINRA registrations are effective.

Under the Uniform Securities Act (USA 401(b)), broker-dealers must have BOTH effective state and FINRA registration before conducting business in a state. Filing alone is not sufficient (A), nor is approval from only one authority (C). State registration is always required regardless of FINRA membership (D).

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