Series 24: Other Types Of Brokers

Taken from our Series 24 Online Guide

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Other Types of Brokers

Prime brokers are firms that provide services for other firms (e.g., hedge funds or other institutional investors). Prime brokers are typically investment banks, but can also be broker-dealers. They often clear and settle trades that involve numerous brokers. When a customer firm of a prime broker wants to effect a trade, it will first go to an executing broker to handle the trade. The executing broker will then inform the prime broker, who will clear and settle the trade.

  • • Prime brokers are required to maintain at least $1,500,000 in net capital.
  • • Executing brokers are required to keep at least $1,000,000 in net capital.
  • • Firms that deal solely with direct participation programs or engage exclusively in mergers and acquisitions must only carry a minimum of $5,000.
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Type of Broker

Minimum Net Capital Requirement

Carrying firms that carry accounts and hold custody of client assets

$250,000

Firms that carry accounts, but do not hold custody of client assets

$100,000

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