Undue Concentration
For securities (including money market instruments and securities that are collateral to secured demand notes) whose market value exceeds 10% of a firm’s tentative net capital, an additional deduction must be applied. This additional haircut applies to that portion of the securities position in excess of 10% of the broker-dealer’s tentative net capital. The haircut is 15% of the excess for equity securities. For most other securities, it is 50% of the percentage deduction otherwise applied to that security. The undue concentration charge does not apply to exempted securities (US government securities) or redeemable investment company securities (mutual funds).
QUESTION: A
