Knowledge base
Frequently Asked Questions
Answers to the most common questions about broker-dealer formation, ATS registration, digital securities, and financial infrastructure consulting.
Broker-Dealer Formation
What does it take to form a broker-dealer in the United States?
Forming a broker-dealer requires SEC registration via Form BD, FINRA membership through the New Member Application (NMA) process, state-level Blue Sky registrations, minimum net capital compliance under SEC Rule 15c3-1, Written Supervisory Procedures (WSPs), an AML program, and SIPC membership. The FINRA NMA process typically takes 6–12 months and involves detailed review of your business plan, financials, personnel, and compliance infrastructure. Fintovra guides clients through every step — from entity structuring to final FINRA approval.
How long does the FINRA New Member Application (NMA) process take?
The FINRA NMA process typically takes between 6 and 12 months from initial filing to approval, though complex applications or those with deficiencies can take longer. The process includes an initial review period, a membership interview, and a final decision. Fintovra's experience with FINRA's expectations significantly reduces deficiency letters and accelerates the timeline.
What is the minimum net capital requirement for a broker-dealer?
Minimum net capital requirements under SEC Rule 15c3-1 vary by business model. Introducing broker-dealers that do not hold customer funds or securities require a minimum of $5,000. Broker-dealers that introduce on a fully disclosed basis require $50,000. Those that carry customer accounts or act as market makers require $250,000 or more. Fintovra helps clients determine the right business model and structure their capital accordingly.
What is a Continuing Membership Application (CMA) and when is it required?
A Continuing Membership Application (CMA) is required when an existing FINRA member firm makes a material change to its business — such as adding a new business line, changing ownership or control, expanding to new offices, or significantly increasing the number of registered representatives. FINRA must approve these changes before they take effect. Fintovra prepares and manages CMA filings to ensure smooth approval with minimal disruption to operations.
Do I need a broker-dealer license to operate a digital asset trading platform?
It depends on whether the digital assets you trade qualify as securities under U.S. law. If they do, operating a trading platform for those assets generally requires broker-dealer registration and, if the platform matches buyers and sellers, ATS registration. The SEC has increasingly taken the position that many tokens are securities. Fintovra helps clients analyze their token classification, determine the appropriate regulatory path, and build compliant infrastructure.
Alternative Trading Systems (ATS)
What is an Alternative Trading System (ATS) and how does it differ from a stock exchange?
An Alternative Trading System (ATS) is an SEC-regulated trading venue that matches buyers and sellers of securities but is not registered as a national securities exchange. ATSs operate under Regulation ATS and must be operated by a registered broker-dealer. Unlike exchanges, ATSs are not self-regulatory organizations and have more flexibility in their business models. They are commonly used for institutional block trading, private securities, and digital asset securities.
What is required to register and operate an ATS?
To operate an ATS, you must first be a registered broker-dealer. You then file Form ATS with the SEC at least 20 days before commencing operations. Ongoing obligations include Form ATS-R filings for material changes, fair access requirements if volume thresholds are met, systems capacity and integrity standards, and recordkeeping requirements. Fintovra designs the full ATS infrastructure — technology, compliance, and operations — and manages the regulatory filing process.
Can an ATS trade digital securities or tokenized assets?
Yes. An ATS can trade digital asset securities — tokens that qualify as securities under U.S. law — provided the ATS and its operator comply with applicable SEC and FINRA requirements. The SEC has issued guidance on Special Purpose Broker-Dealers (SPBDs) for firms that custody digital asset securities. Fintovra specializes in building ATS infrastructure specifically designed for digital securities, including blockchain settlement, smart contract compliance controls, and investor eligibility enforcement.
Digital Securities & Blockchain
What are digital securities and how are they different from cryptocurrencies?
Digital securities (also called security tokens) are financial instruments — equity, debt, fund interests, real estate — that are issued and managed using blockchain or distributed ledger technology. Unlike utility tokens or cryptocurrencies, digital securities are subject to U.S. securities laws and must be issued and traded in compliance with SEC regulations. Fintovra builds the full infrastructure stack for digital securities issuance, transfer, and trading.
What is a Special Purpose Broker-Dealer (SPBD) for digital asset securities?
A Special Purpose Broker-Dealer (SPBD) is a broker-dealer that limits its business exclusively to digital asset securities and is permitted to custody those assets under a temporary SEC framework. SPBDs must comply with specific requirements around safeguarding customer assets, recordkeeping, and business limitations. Fintovra helps clients structure and register SPBDs and build the technology and compliance infrastructure required to operate under this framework.
How does Fintovra help firms bridge traditional finance and DeFi?
Fintovra designs infrastructure that connects regulated capital markets with decentralized finance protocols — including compliant on-chain issuance, KYC/AML-gated DeFi access, tokenized fund structures, and blockchain-based settlement for traditional securities. Our work spans smart contract architecture, regulatory analysis, broker-dealer and ATS registration, and ongoing compliance — giving clients a single partner for the full TradFi-to-DeFi bridge.
Working with Fintovra
What types of clients does Fintovra work with?
Fintovra works with fintech startups building regulated trading platforms, crypto-native firms seeking broker-dealer or ATS registration, investment banks expanding into digital assets, family offices establishing proprietary trading operations, and institutional investors launching new financial products. Our clients range from pre-revenue startups to established financial institutions navigating complex regulatory transitions.
How does the Fintovra engagement process work?
Engagements typically begin with a consultation to assess your business model, regulatory requirements, and timeline. Fintovra then develops a tailored roadmap covering entity structure, regulatory filings, technology build-out, compliance infrastructure, and operational readiness. We work alongside your team from initial planning through FINRA/SEC approval and post-launch operations, providing hands-on support at every stage.
How long does it take to go from concept to a fully operational broker-dealer?
The timeline from concept to operational broker-dealer is typically 12–18 months, depending on the complexity of the business model, the completeness of the application, and FINRA's review timeline. Key milestones include entity formation (1–2 months), application preparation (2–3 months), FINRA NMA review (6–12 months), and post-approval operational setup (1–2 months). Fintovra's experience with FINRA's process helps clients avoid common delays and deficiencies.
Still have questions?
Every firm's situation is different. Schedule a consultation and we'll walk through your specific regulatory and infrastructure needs.
Request a Consultation