You can have a large broker-dealer with a $250,000 minimum
net capital requirement but they keep a total of $33 million of net capital on hand while a smaller broker-dealer with the same $250,000 requirement may have only $500,000 of net capital.
There would also be a limit on debt financing which is part of their
net capital requirement.
The rules also require CFTC registration of introducing brokers (IBs) and trading advisors, who need to maintain a minimum
net capital requirement or enter into a guarantee agreement with a Forex broker.
BOSTON GROUP ORDERED TO SHUT DOWN: The Los Angeles-based brokerage firm that took Studio City-based Jerry's Famous Deli public, no longer meets its $250,000 minimum
net capital requirement set by regulators due to sharp drops in the stock prices of its IPOs.
The Barclays transaction will generate $25 million of net cash proceeds to the Company, and as a result of the transaction, the Company will no longer have a $76 million
net capital requirement related to the DMM operations.
We define liquid assets as the sum of (a) corporate cash and cash equivalents, (b) corporate short-term investments, (c) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 5% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of 120% of the minimum dollar
net capital requirement or in excess of 8 1/3% of aggregate indebtedness and (d) Tier 1 capital of our trust company in excess of the minimum dollar requirement.
As a condition of licensure, the Department of Corporations mandates a minimum dollar
net capital requirement of $250,000.
Upon the completion of the acquisition of the Exchange Place, the company will have satisfied the
net capital requirement to apply for a listing to trade as a NASD Small Cap Company.
Clients seeking internal model approval under Solvency II must now demonstrate sufficient
net capital requirements at the one in 200 year net aggregate exceedance probability level.
Pickard: In sum, they went from an objective standard to a subjective standard of measuring
net capital requirements, and in the process, the restraints on incurring indebtedness and the restraints on incurring positions were significantly lessened.
Banks and brokerages that want to comply with
net capital requirements have to hold assets rated by NRSROs.
Securities firms incorporated in the United States that are broker-dealers registered with the Securities and Exchange Commission (SEC) and are in compliance with the SEC's
net capital requirements
