NOTE 16 – REGULATIONS AND CAPITAL REQUIREMENTS

For a discussion of the various regulations and capital requirements applicable to certain of our businesses and subsidiaries, see Note 22, pages 128 – 130, of our 2010 Form 10-K.

The net capital position of RJ&A are as follows:

	June 30, 2011			September 30, 2010
	($ in thousands)
Raymond James & Associates, Inc.:
(Alternative Method elected)
Net capital as a percent of aggregate debit items		23.92	%		17.37	%
Net capital	$	381,464		$	253,341
Less: required net capital		(31,896	)		(29,169	)
Excess net capital	$	349,568		$	224,172

The net capital position of RJFS are as follows:

	June 30, 2011			September 30, 2010
	(in thousands)
Raymond James Financial Services, Inc.:
(Alternative Method elected)
Net capital	$	14,137		$	14,540
Less: required net capital		(250	)		(250	)
Excess net capital	$	13,887		$	14,290

The risk adjusted capital of our Canadian broker-dealer subsidiary RJ Ltd. are as follows (in Canadian dollars):

	June 30, 2011			September 30, 2010
	(in thousands)
Raymond James Ltd.:
Risk adjusted capital before minimum	$	66,637		$	52,022
Less: required minimum capital		(250	)		(250	)
Risk adjusted capital	$	66,387		$	51,772

At June 30, 2011, our other active domestic and international broker-dealers are in compliance with and met all net capital requirements.

As of the most recent notification from its regulator, RJ Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” RJ Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed RJ Bank's categorization.

	Actual					Requirement for capital adequacy purposes					To be well capitalized under prompt corrective action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	($ in thousands)
As of June 30, 2011:
Total capital (to risk-weighted assets)	$	988,740		13.7	%	$	576,965		8.0	%	$	721,206		10.0	%
Tier I capital (to risk-weighted assets)		897,955		12.5	%		288,482		4.0	%		432,724		6.0	%
Tier I capital (to adjusted assets)		897,955		11.3	%		317,229		4.0	%		396,537		5.0	%

As of September 30, 2010 :
Total capital (to risk-weighted assets)	$	985,961		13.0	%	$	608,096		8.0	%	$	760,120		10.0	%
Tier I capital (to risk-weighted assets)		890,442		11.7	%		304,048		4.0	%		456,072		6.0	%
Tier I capital (to adjusted assets)		890,442		8.2	%		434,193		4.0	%		542,741		5.0	%

RJ Bank calculates the Total Capital and Tier I Capital ratios in order to assess its compliance with both regulatory requirements and its internal capital policy in addition to providing a measure of underutilized capital should these ratios become excessive. Capital levels are continually monitored to assess RJ Bank's capital position.

Excluding the impact of the additional assets held at September 30, 2010 in order for RJ Bank to meet point-in-time regulatory balance sheet composition requirements related to its qualifying as a thrift institution (see page 130 of the 2010 Form 10-K), the Total Capital (to risk-weighted assets) ratio and the Tier I Capital (to adjusted assets) ratio decreased from 14.2% and 12.1%, respectively, at September 30, 2010 to 13.7% and 11.3%, respectively, at June 30, 2011. The decrease in both ratios was due to $100 million in dividends declared and paid to RJF during the current fiscal year, partially offset by earnings and $25 million of capital contributions received from RJF during this same period.