Series 14: 4.1.1.2. Ratio Requirement

Taken from our Series 14 Online Guide

4.1.1.2. Ratio Requirement

Typically, the ratio requirement is based on a firm’s aggregate indebtedness. Aggregate indebtedness is made up of liabilities that are not secured by any of the firm’s assets. This is the amount that a firm must pay its unsecured creditors if it were to liquidate. Aggregate indebtedness includes:

Loans that are backed by customer securities

Customer credit balances

Accounts payable

Aggregate indebtedness does not include loans that are backed by firm securities.

There are different ratio requirements for first-year firms and established firms. Broker-dealers that have operated for one year or less must ensure that their aggregate indebtedness is not more than eight times the amou

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