Broker Dealer and Sales Representatives

Broker-Dealers and Sales Representatives 

General Licensure Information

In order to transact business as a broker-dealer or sales representative in the State of Colorado, a person must be licensed or exempt from licensing under Section 11-51-402, C.R.S.

Who needs to be licensed?

  • Broker-Dealers ("BD Firms"): Any entity that engages in the trading of securities for its own account or on behalf of customers.
  • Sales Representatives: Any person that engages in the sale or purchase of securities or investment products on behalf of and with the authority of a broker-dealer or an issuer attempting to affect the sale of the issuer's own securities.
  • Mortgage broker-dealers: Entities that limit their business to transactions in notes, bond, or evidence of indebtedness that are secured by real estate mortgages and deeds of trust. Mortgage broker-dealers are represented by salespersons referred to as mortgage sales representatives.

With whom do broker-dealers and sales representatives have to become licensed/registered?

  • All broker-dealers and sales representatives that transact business in the State of Colorado or with Colorado residents are required either
    • to be licensed by the Colorado Division of Securities (Division) and registered with the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC). BD Firms operating interstate must be registered with FINRA (FINRA BD Firm); or
    • to be licensed directly by the Division if conducting business within the State of Colorado and not registered with FINRA and the SEC (Colorado BD Firm). 
  • Mortgage broker-dealers and mortgage sales representatives must be licensed with the Division pursuant to the Colorado Securities Act.

Central Registration Depository (CRD) Information

The Central Registration Depository (CRD) is the electronic filing system used by regulators, broker-dealers, and sales representatives nationwide. CRD is a repository of data pertaining to licensees and their affiliated persons. CRD facilitates a variety of functions, including support of licensing and registration activities and disclosure archival. It is operated by FINRA and can be accessed on the FINRA site.


All Colorado fees and licensing forms.

A FINRA BD Firm seeking to license in the State of Colorado should take the following steps to file a broker-dealer application:

Step 1) Deposit in your CRD account the appropriate fees for your firm and the associated representatives.


Step 2) Electronically file an Amended Form BD, designating Colorado as the recipient, through CRD. The form contains filing instructions.
 
NOTE: Once the Amended Form BD is filed, the application will be sent to the "Colorado No Status CRD Queue." This queue is reviewed frequently. Once you submit an application for consideration, it will be reviewed, and the firm will be notified by a member of the Division staff if it is necessary to provide any information to supplement the Amended Form BD. Additional information may be requested if there are questions regarding disclosures.
 
The State of Colorado does not require the firm to file any state-specific forms as part of the licensing process.

A BD Firm seeking to license sales reps to represent it in the State of Colorado should take the following steps to file a sales representative application for each person:

Step 1) Submit the appropriate fee through CRD.
Step 2) File the Form U-4, requesting Colorado licensure, through CRD. Instructions for completing and filing can be found on the form.
 
NOTE: All amendments to the Form U-4 and withdrawal requests filed on the Form U-5 must be filed with CRD.

Colorado BD Firms: A person applying for a license as a BD Firm in Colorado that is not registered or registering under the Federal Securities Exchange Act of 1934 ("the 34 Act") will send the application and the amendments to the application directly to the Division.

Mortgage broker-dealers: Those whose businesses involve raising money from individual investors, and are not limited exclusively to placing mortgage loans with institutional investors are subject to the broker-dealer licensing requirements under Colorado securities laws and must apply directly to the Division for licensing. 

Application materials should be emailed to DORA_Securities_Licensing@state.co.us

Filing fees must be mailed to:

Attn: Annastasia Valencia
Colorado Division of Securities
1560 Broadway, Suite 900
Denver, CO 80202

Step 1) File a Form BD with the Colorado Division of Securities.


Step 2) File Form U-4 on behalf of each person who will represent the firm in Colorado as a sales representative. Designate primary responsibility to supervise all licensed sales representatives of the broker-dealer to at least one person. Mark the box named "Other" under Item 4 of Form U-4 and insert the phrase "Designated Supervisor."


Step 3) Provide proof the applicant meets the qualifications to be a sales representative (see below). Submit documentation showing the applicant has successfully completed/passed the required qualification examinations administered through FINRA. Application materials should include documentation verifying the person is lawfully present in the United States with verification of the applicant's identity. An applicant can show lawful presence by submitting an executed affidavit stating that he/she is a United States citizen or legal permanent resident in a form substantially similar to Form AE. An electronic copy of the Form AE is available via the "Forms" page of this website. An applicant can show proof of identity by presenting one of the following to the Division: A Colorado driver's license; an out-of-state issued photo driver's license expired less than one year; valid U.S. Military Identification; tribal Identification Card; other documentation identified in the Colorado Securities Rules. See Colorado Rule 51-4.3 for additional information on submitting an application for a sales representative license.

Step 4) Submit the appropriate Colorado state licensing fees with the Form BD and the Form U-4 to the Division. Include the appropriate licensing fee for each applicant for a sales representative license. Make checks payable to the Colorado State Treasurer.


Step 5) Submit a Consent of Service of Process Form for the broker-dealer and each sales representative. You may use the Form U-2 Uniform Consent to Service of Process Form located on the "Forms" page of this website.

NOTE: A mortgage broker-dealer whose business is limited exclusively to effecting transactions with financial institutions [as defined in section 11-51-201(6), C.R.S.] is exempt from the licensing requirements of section 11-51-401(1), C.R.S. Financial or institutional investors include depository institutions, insurance companies, investment companies, business development companies, and employee pensions, profit-sharing, or benefit plans. A complete list of entities that qualify as financial and institutional investors can be found in the statute.

To be deemed qualified, an applicant for a mortgage sales reps license will have passed the Series 63 Examination. An applicant may enroll for and schedule to take the Series 63 Examination by contacting FINRA at this link here 

In addition to passing the Series 63 Examination, an applicant for a license as a sales representative for either a state-licensed broker-dealer and whose securities business is limited solely to the offer and sale of direct participation investments involving real estate-related securities or an issuer whose business is equally limited shall successfully complete the Direct Participation Program Representative Examination (Series 22) or the Direct Participation Principal Examination (Series 39) administered through FINRA.

These examination requirements may be satisfied upon proof that the respective examinations were successfully completed within the two (2) year period immediately preceding the date of the application for licensing.

Please consult the Colorado Securities Act and the Colorado Securities Rules for additional information regarding all of the requirements that must be met to become licensed as a mortgage broker-dealer and/or a mortgage sales rep in Colorado.

You may contact the Division of Securities at (303) 894-2320 if you have additional questions.

 

  • How do I apply for a FINRA examination?
    • In order to take most FINRA examinations, you must be associated with or employed by a FINRA member broker-dealer firm; however, the Securities Industry Essentials (SIE) Examination is open to anyone 18 or older, including students and prospective candidates that may want to show future employers they have basic industry knowledge. You will find additional information about the SIE examination at this link to the FINRA website. Examination candidates can enroll for and schedule to take the SIE or the Series 63, 65, or 66 State Examination by contacting FINRA at this link
  • I have a current license as a sales representative and I have passed the required FINRA qualification examinations. What do I have to do to keep my license effective? How long before I must retake any examinations?
    • The examinations you have passed meet the requirements for sales representative licensure in the State of Colorado. Generally, as long as your license remains active, you will not need to retake the examinations. However, if your registration becomes inactive for a period of two years or longer, you may need to retake the examinations to become licensed with FINRA. Under certain circumstances, you may qualify for a FINRA Examination Waiver.
  • How do I get information regarding the waiver of qualification examinations for a FINRA sales representative license?
    • Contact FINRA for information regarding these types of waivers. You will find information about waivers pursuant to FINRA Rule 9600 Series on the FINRA Waiver Guidelines page
  • Once a license is granted, are there annual renewal fees for broker-dealer firms and sales representatives? 
    • Yes. Broker-dealer firms and sales representatives must renew annually. Additionally, there is a continuing obligation to update information throughout the year if a change occurs in the information furnished on the original application. The annual renewal program begins in the fourth quarter each year and is administered by FINRA.
  • Once a license is granted, are there annual fees for mortgage broker-dealers and mortgage sales representatives?
    • Yes. Mortgage broker-dealers and mortgage sales representatives must renew annually and pay an annual fee. Additionally, there is a continuing obligation to update information throughout the year if a change occurs in the information furnished on the original application. 
  • Do FINRA broker-dealer firms have to file annual audited financial statements or FOCUS Reports directly with the Division of Securities?
    • No. These filings are to be filed with FINRA. The Division does not accept direct filings of annual audited financial statements or FOCUS Reports. 
  • May an individual licensee be licensed with a broker-dealer firm and an investment adviser, i.e. maintain dual licensure?
    • Yes. The Colorado Securities Act allows a person to act as a sales representative and an investment adviser represenative. See Section 11-51-406(4)(b), C.R.S.
  • When do broker-dealer firms need to update the Form BD?
    • Every licensed broker-dealer firm and every licensed sales representative is required to file Form BD amendments or Form U-4 amendments to correct any information on applications that is or has become inaccurate in any material respect. Amendments made by FINRA broker-dealer firms and their sales representatives shall be filed with the Central Registration Depository (CRD). Amendments made by mortgage broker-dealers should be submitted directly to the Division.
  • When do I need to file an update or an amendment on my Form U-4?
    • Every licensed sales representative is required to file Form U-4 amendments to correct any information on applications that is or has become inaccurate in any material respect. Amendments made by sales representatives shall be filed with the Central Registration Depository (CRD). Amendments made by mortgage sales representatives should be submitted directly to the Division.
  • Does the State of Colorado have any licensing exemptions for firms and/or individuals?
    • The Colorado Securities Act does contain licensing exemptions for firms and individuals. Exemptions for broker-dealers, sales representatives, investment advisers, and investment adviser representatives can be found in 11-51-402, C.R.S.
  • Does the State of Colorado charge a Mass Transfer Fee?
    • No. There is no charge for transferring licenses from one licensed entity to another licensed entity in a Mass Transfer.

NOTE: The broker-dealer firm and sales representative pages have been created to provide you with the responses to questions frequently addressed to Licensing Staff in regards to the licensing of broker-dealer firms and sales representatives in the State of Colorado.

It is impossible to address all licensing questions; therefore, the reader is invited to review the Colorado Securities Act, the Colorado Securities Rules (Code of Colorado Regulations at 3 CCR 704-1), or contact a member of the staff for additional information at (303) 894-2320.