Brokers will be allowed to continue trading if their authorisation application is refused, according to the FSA's John Tiner.
Speaking to delegates at Strategy 2002 about upcoming statutory regulation, Tiner said that if a broker's application was turned down or goes to appeal, they would be given a "period of grace".
However he would not confirm the exact conditions under which brokers would be allowed to trade under.
He said: "Obviously at this stage it is too early to say how this scenario would be treated, but I envisage that brokers would be allowed to continue as usual."
Tiner also suggested how the FSA authorisation process would shape up. He said: "The process should begin in early December. We have opted for a system which will provide detailed guidance rather than detailed directives.
"To deal with the workload we are considering appointing 'representatives' which could act as principal 'approved' intermediaries for firms. This networking approach will allow us to implement standards while maintaining efficient practice."
He added: "We are also looking at implementing an IT system which will be durable enough to handle the expected workload."
