December 11, 1992
TO: BANK BROKER/DEALER ADVISORY COMMITTEE NO. 12-92
BROKER/DEALER ADVISORY COMMITTEE NO. 40-92
INSURANCE BROKER-DEALER ADVISORY COMMITTEE NO. 20-92
OPERATIONS COMMITTEE NO. 37-92
SEC RULES COMMITTEE NO. 92-92
SMALL FUNDS COMMITTEE NO. 19-92
RE: SEC ADOPTION AND PROPOSAL OF AMENDMENTS TO BROKER-DEALER
NET CAPITAL RULE
__________________________________________________________
The Securities and Exchange Commission recently adopted
amendments to Rule 15c3-1 under the Securities Exchange Act,
governing broker-dealer net capital requirements, and proposed
other amendments to Rule 15c3-1. Copies of the adopted and
proposed amendments are attached.
The adopted amendments restructure much of the rule, and
raise the minimum capital requirements for various types of
broker-dealers. The amendments raise the minimum net capital
requirement for firms that limit their activities to transactions
in registered investment company shares, and that receive
customer funds or securities, from $2500 to $25,000. (This
increase would be effected pursuant to a phase-in schedule
described in Appendix E of the adopting release.)
Other broker-dealers (including other mutual fund firms)
that do not handle any customer funds or securities and that are
not direct wire order firms, must maintain a minimum of $5000 in
net capital. (This requirement also would be effected pursuant
to a phase-in schedule described in Appendix E to the adopting
release.) However, the SEC in the attached release has proposed
that the minimum net capital requirement for those firms be
increased to $10,000. In the proposing release, the Commission
emphasized that these firms must "develop procedures to prevent
their customers from transmitting funds or securities to the
firm" in order to be in the $10,000 rather than the $25,000
category.
The SEC also amended the charge for mutual fund payables
under the net capital rule. The rule requires a broker-dealer
that owes money to a mutual fund in connection with a purchase of
shares of that fund to include that amount in aggregate
indebtedness even if offset by a receivable from another broker-
dealer related to that transaction. As amended, the rule
requires inclusion only of 15% of those amounts payable.
Because the comment period for the proposed rules expires
on February 5, 1993, please call me at 202/955-6251 with any
comments you might have on the proposed rules by January 11,
1993.
Thomas M. Selman
Assistant Counsel
Attachments