Regulatory Notification
Each carrying or clearing member must notify FINRA in writing within 24 hours if one of the following occurs:
- • Its net capital falls below 150% of its minimum net capital requirement
- • Its aggregate indebtedness is more than 1,000% of its net capital (more than a 10:1 ratio)
- • Its deduction of capital withdrawals, which it anticipates making during the next six months, would result in either of the above conditions
Note: FINRA’s notification requirements with respect to net capital and aggregate indebtedness are more stringent than the SEC’s notification requirements, discussed in Chapter Three. Note the differences in the table that follows.
|
Net Capital Notification Requirements |
|||
|
Type of Firm |
Agency to notify |
Exceeds Criteria |
Timetable |
|
Firm that has been in business less than one year |
FINRA |
8:1 aggregate indebtedness |
Within 24 hours of discovery; in writing |
|
Established firm |
FINRA |
Below 150% of net capital |
Within 24 hours of discovery; in writing |
|
Established firm |
FINRA |
10:1 aggregate indebtedness |
Within 24 hours of discovery; in writing |
|
Established firm |
SEC |
Below 120% of net capital |
|
