Rule 15c3-1

Rule 15c3-1

An SEC rule setting capital requirements for brokers and dealers. Under Rule 15c3-1, a broker or dealer must have sufficient liquidity in order to cover the most pressing obligations. This is defined as having a certain amount of liquidity as a percentage of the broker/dealer's total obligations. If the percentage falls below a certain point, the broker or dealer may not be allowed to take on new clients and may have restrictions placed on dealings with current clients.

Rule 15c3-1

An SEC rule that sets minimum net capital requirements for broker-dealers. Firms are expected to have liquid assets equal to or greater than a certain percentage of total liabilities. If the ratio falls below this minimum, the broker-dealer may face restrictions on soliciting new business or on keeping existing business.
References in periodicals archive ?
Rule 15c3-1 requires that they maintain a minimum level of net capital, which the SEC has said must include highly liquid assets.
* The broker/dealer complied with Rule 15c3-1 (i.e., the Net Capital Rule) and paragraph (e) of Rule I 5c3-3 ("Special Reserve Bank Account for the Exclusive Benefit of Customers") as of the end of the most recent fiscal year.
In 1975, the SEC proposed (in Rule 15c3-1) the establishment of minimum net worth (capital) requirements for securities broker-dealers.
* Gravitas: SEC Rule 15c3-1 require a securities firm to cease doing business if it is not in compliance
* Granularity: SEC Rule 15c3-1 defines the "haircut" or percentage deduction to be applied to each category of assets in the computation of net capital.
SEC Rule 15c3-1 imposes a cap of no more than a 15-1 ratio.
For example, the SEC could permit, with regulatory approval, internally developed ratings by broker-dealers for computing capital charges under the Net Capital Rule (Rule 15c3-1).
Since the securities industry is heavily regulated, the guide provides an overview of numerous regulatory considerations, primarily those of the SEC, including net capital requirements under Rule 15c3-1, customer protection rules under Rule 15c3-3, and reporting requirements under Rule 17a-5.
These minimum levels and applicable calculations are defined in SEC Rule 15c3-1. The new guide incorporates many definitions and narrative explanations included in Rule 15c3-1 and includes an outline of the net capital calculation and the alternative method available under the rule.