SIE practice questionhardNet Capital Rule
SEC Rule 15c3-1 (the net capital rule) requires broker-dealers to:
- AMaintain a minimum of $25 million in liquid assets
- BInvest all customer funds in U.S. Treasury securities
- CMaintain minimum capital reserves to meet obligations to customers and counterparties✓ Correct answer
- DReport their net capital to FINRA on a daily basis
Explanation
Why C — Maintain minimum capital reserves to meet obligations to customers and counterparties
The net capital rule (SEC Rule 15c3-1) requires broker-dealers to maintain sufficient liquid capital (net capital) to meet obligations to customers and counterparties. The specific minimum varies based on the firm's business activities (introducing firms, carrying firms, market makers have different requirements). The rule ensures firms can meet customer demands for return of securities and cash. It requires firms to compute their net capital regularly and file FOCUS reports with regulators.
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