What are the capital requirements for broker dealers?
A broker or dealer shall maintain net capital of not less than $50,000 if it introduces transactions and accounts of customers or other brokers or dealers to another registered broker or dealer that carries such accounts on a fully disclosed basis, and if the broker or dealer receives but does not hold customer or …
Why do broker dealers have capital requirements?
The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission (“SEC”) in 1975 to regulate directly the ability of broker-dealers to meet their financial obligations to customers and other creditors.
What does held in street name mean?
A security is held in “street name” when a brokerage holds it on behalf of a client. The name that appears on the stock or bond certificate is that of the broker, but the person who paid for the securities retains ownership rights.
What is the SEC customer protection rule?
The Customer Protection Rule requires registered broker-dealers to safeguard the investment assets of their customers. The rule is designed to protect those customers from monetary losses and delays that can occur when that firm fails.
Do broker/dealers hold assets?
What Are Broker-Dealers? Broker-dealers that maintain custody of a customer’s securities and cash are subject to strict requirements under the Exchange Act that are designed to protect and account for these assets.
What is SEC Rule 15c3 5?
Rule 15c3-5 will require a broker or dealer that has market access, or that provides a customer or any other person with access to an exchange or ATS through use of its MPID or otherwise, to establish, document, and maintain a system of risk management controls and supervisory procedures reasonably designed to manage …
Why did the SEC introduce Reg NMS in 2005?
The SEC issued the Regulation National Market System (Reg NMS) in 2005 to strengthen U.S. securities exchanges and account for changing technology. The goal of Reg NMS was to improve market efficiency and fairness.