Compliance FAQ | GiGCXOs Knowledge Base

Question 1

How do I register as a broker-dealer?

Accepted Answer

Registration with FINRA and the SEC is required to operate as a broker-dealer legally. The process involves submitting Form BD to the SEC and applying for FINRA membership via Form NMA, along with demonstrating adequate financial resources, qualified personnel, and written supervisory procedures. GiGCXOs manages the full registration process end-to-end, targeting a 90-day timeline from engagement to approval.

Question 2

What are the steps to register a broker-dealer with FINRA?

Accepted Answer

The registration process involves: (1) Complete and submit Form BD to the SEC via EDGAR; (2) Apply for FINRA membership by submitting Form NMA; (3) Submit required documentation including business plans, financial statements, and Written Supervisory Procedures; (4) Pass the pre-membership interview and qualification exams; (5) Undergo FINRA's review and approval process including background checks and financial reviews. With GiGCXOs managing the process, we target a 90-day timeline from engagement to approval.

Question 3

How long does the FINRA registration process take?

Accepted Answer

The registration process typically takes 6 to 12 months for firms navigating it independently, depending on application completeness, the complexity of the business model, and FINRA's requests for additional information. With GiGCXOs managing the process end-to-end, we target 90 days from initial engagement to approval.

Question 4

What is the net capital requirement for a broker-dealer?

Accepted Answer

Net capital requirements vary based on the firm's business model: Introducing BD (fully disclosed): minimum $50,000; Introducing BD (non-carrying, not fully disclosed): $5,000–$100,000; Carrying firm (holds customer funds and securities): minimum $250,000; Prime broker: minimum $1.5 million; Self-clearing: minimum $1 million; BD selling only mutual fund shares: minimum $25,000.

Question 5

When must an investment adviser register with the SEC?

Accepted Answer

An investment adviser with $110 million or more in assets under management generally must register with the SEC under the Investment Advisers Act of 1940. Advisers with AUM between $25 million and $110 million typically register with their state securities regulator. Advisers below $25 million AUM are generally exempt from registration but may still be subject to state notice-filing requirements.

Question 6

What is an introducing broker?

Accepted Answer

An introducing broker (IB) is a firm or individual that solicits orders from customers to buy or sell commodity futures contracts or commodity options but does not accept money, securities, or property to margin, guarantee, or secure any commodity futures trades. Customer accounts and all margin activities are handled by a futures commission merchant (FCM) that clears the trades. IBs must be registered with the CFTC and are NFA members.

Question 7

Are prediction markets regulated in the United States?

Accepted Answer

Yes. The CFTC has asserted jurisdiction over prediction market platforms under the Commodity Exchange Act, characterizing event contracts as commodity interests. This means prediction market operators that accept orders from the general public must generally register as a Designated Contract Market (DCM) or qualify for an applicable exemption. Depending on contract design and customer base, SEC oversight may also apply.

Question 8

What is Predict360 by GiGCXOs?

Accepted Answer

Predict360 is GiGCXOs' end-to-end compliance service for prediction market operators. It covers: (1) regulatory analysis and CFTC pathway determination; (2) securities-nexus review; (3) state licensing mapping; (4) DCM registration filing and CFTC engagement; (5) compliance program design including WSPs, AML, and contract-certification templates; (6) AI-powered market surveillance; (7) fractional CCO services; and (8) ongoing compliance calendar management.

Question 9

How are digital assets regulated in the United States?

Accepted Answer

Digital assets in the US are regulated by multiple agencies depending on their classification. The SEC has jurisdiction over digital assets that qualify as securities under the Howey test. The CFTC has jurisdiction over digital assets classified as commodities (including Bitcoin and Ether in certain contexts). FinCEN regulates money transmission activities involving digital assets. State regulators may also impose licensing requirements.

Question 10

What is FinCEN's role in crypto regulation?

Accepted Answer

The Financial Crimes Enforcement Network (FinCEN) is the primary regulator of AML/BSA compliance for crypto businesses. FinCEN has established that exchangers and administrators of convertible virtual currency are money services businesses (MSBs) subject to the Bank Secrecy Act. This means crypto businesses must register with FinCEN, implement written AML programs, file SARs and CTRs, and comply with the Travel Rule for qualifying transfers.

Question 11

Can I outsource compliance functions for my broker-dealer?

Accepted Answer

Yes. Many broker-dealers choose to outsource compliance functions to specialized firms like GiGCXOs. Outsourced CCO, supervisory principals, and compliance staff are all permitted under FINRA rules. However, the firm and its principal(s) remain legally responsible for ensuring compliance with all regulatory requirements. Outsourcing transfers the operational burden, not the ultimate accountability.

Question 12

What is a Futures Commission Merchant (FCM)?

Accepted Answer

A Futures Commission Merchant (FCM) is an entity that solicits or accepts orders to buy or sell futures contracts, commodity options, retail foreign exchange contracts, or swaps, and accepts money or property to margin, guarantee, or secure those trades. FCMs must register with the CFTC and become members of the NFA. They hold customer assets and clear trades on behalf of customers and introducing brokers.

Frequently Asked Questions

Talk to a compliance specialist directly