The Risk Based Haircut methodology may be used to calculate theoretically based capital charges as set forth within the SEC net capital rule (15c3-1 under the Securities Exchange Act of 1934). It applies options price theory and portfolio theory to positions involving listed options for the computation of capital charges.
Aug 27, 2013 · Rule 15c3-1 under the Exchange Act (the “Net Capital Rule”) requires a broker-dealer to maintain, at all times, a minimum amount of net capital depending on the nature of its business. The capital standard in the rule is a net liquid assets test, which imposes standardized deductions (or “haircuts”) on securities, with less-liquid ...
of the net capital deductions required by paragraph (c)(2)(iv)(B) of Rule 15c3-1 for securities lending and borrowing transactions with the deductions required under paragraph (c)(2)(iv)(F) for securities repurchase and reverse repurchase agreement transactions (17 CFR 240 240.15c3- 1(c)(2)(iv)(B) and (c)(2)(iv)(F), respectively); and Pursuant to NYSE Arca, Inc. Rule 4.2(d) and NYSE Arca Equities, Inc. Rule 4.3(d), no broker-dealer shall make any change in its capitalization without the prior written approval of the Exchange. Furthermore, as governed by SEC Rule 15c3-1(e)(1), an “equity withdrawal” constitutes or is defined as the redemption or SEC Net Capital Rule 15c3-1. William Jannace, a former securities regulator with the NYSE and FINRA has developed a comprehensive course the SEC Net Capital rule covering: SEC and FINRA requirements and interactions impacting net capital compliance as well as an overview on broker-dealer structures and operations that impact capital requirements.
The resulting difference between Net capital and required net capital is called excess net capital. Rule 15c3-3, adopted in 1972, provides regulatory safeguards regarding the custody and use of customers’ funds and securities in the conduct of the broker dealers business. It has two parts. Apex’s software applications are intelligently designed to calculate SEA Rule 15c3-1 NET Capital requirements for Regulatory Reporting within the Capital Markets industry. Define Net Capital Ratio. means, as of any date of determination, the percentage of net capital to aggregate debit items of any Person subject to the Net Capital Rule 15c3-1 promulgated by the SEC and computed in accordance with the Formula for Determination of Reserve Requirements for Brokers and Dealers, (Exhibit A to Rule 15c3-3). (A) The aggregate indebtedness of the broker or dealer would exceed 1200 percent of its net capital, or in the case of a broker or dealer operating pursuant to § 240.15c3-1(a)(1)(ii), its net capital would be less than 5 percent of aggregate debit items computed in accordance with § 240.15c3-3a or, if registered as a futures commission ... Pursuant to NYSE Arca, Inc. Rule 4.2(d) and NYSE Arca Equities, Inc. Rule 4.3(d), no broker-dealer shall make any change in its capitalization without the prior written approval of the Exchange. Furthermore, as governed by SEC Rule 15c3-1(e)(1), an “equity withdrawal” constitutes or is defined as the redemption or