NOTE 22 – REGULATIONS AND CAPITAL REQUIREMENTS

Certain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934. RJ&A, a member firm of the Financial Industry Regulatory Authority (“FINRA”), is also subject to the rules of FINRA, whose requirements are substantially the same. Rule 15c3-1 requires that aggregate indebtedness, as defined, not exceed 15 times net capital, as defined. Rule 15c3-1 also provides for an “alternative net capital requirement,” which RJ&A and our wholly owned broker-dealer subsidiary Raymond James Financial Services, Inc. (“RJFS”) have elected. Regulations require that minimum net capital, as defined, be equal to the greater of $1 million, ($250,000 for RJFS) or two percent of aggregate debit items arising from client transactions. FINRA may require a member firm to reduce its business if its net capital is less than four percent of Aggregate Debit Items and may prohibit a member firm from expanding its business and declaring cash dividends if its net capital is less than five percent of aggregate debit items. The net capital position of RJ&A is as follows:

	As of September 30,
	2011			2010
	($ in thousands)
Raymond James & Associates, Inc.:
(Alternative Method elected)
Net capital as a percent of aggregate debit items		27.02	%		17.37	%
Net capital	$	409,869		$	253,341
Less: Required net capital		(30,340	)		(29,169	)
Excess net capital	$	379,529		$	224,172

At September 30, 2011 and September 30, 2010, RJFS had no aggregate debit items and, therefore, the minimum net capital of $250,000 was applicable. The net capital position of RJFS is as follows:

	As of September 30,
	2011			2010
	(in thousands)
Raymond James Financial Services, Inc.:
(Alternative Method elected)
Net capital	$	17,829		$	14,540
Less: Required net capital		(250	)		(250	)
Excess net capital	$	17,579		$	14,290

Raymond James Limited (“RJ Ltd.”), our wholly owned broker-dealer subsidiary headquartered in Canada, is subject to the Minimum Capital Rule (Dealer Member Rule No. 17 of the Investment Industry Regulatory Organization of Canada (“IIROC”)) and the Early Warning System (Dealer Member Rule No. 30 of the IIROC). The Minimum Capital Rule requires that every member shall have and maintain at all times risk-adjusted capital greater than zero calculated in accordance with Form 1 (Joint Regulatory Financial Questionnaire and Report) and with such requirements as the Board of Directors of the IIROC may from time to time prescribe. Insufficient risk-adjusted capital may result in suspension from membership in the stock exchanges or the IIROC.

The Early Warning System is designed to provide advance warning that a member firm is encountering financial difficulties. This system imposes certain sanctions on members who are designated in Early Warning Level 1 or Level 2 according to their capital, profitability, liquidity position, frequency of designation or at the discretion of the IIROC. Restrictions on business activities and capital transactions, early filing requirements, and mandated corrective measures are sanctions that may be imposed as part of the Early Warning System. We are not in Early Warning Level 1 or Level 2 at either September 30, 2011 or September 30, 2010. The risk-adjusted capital of RJ Ltd. is as follows (in Canadian dollars):

	As of September 30,
	2011			2010
	(in thousands)
Raymond James Ltd.:
Risk-adjusted capital before minimum	$	70,855		$	52,022
Less: Required minimum capital		(250	)		(250	)
Risk adjusted capital	$	70,605		$	51,772

As of September 30, 2011, all of our other active domestic and international broker-dealers were in compliance with and met all net capital requirements.

RJ Bank is subject to various regulatory and capital requirements administered by bank regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, RJ Bank must meet specific capital guidelines that involve quantitative measures of RJ Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. RJ Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require RJ Bank to maintain minimum amounts and ratios (set forth in the table below) of Total and Tier I Capital to risk-weighted assets and Tier I Capital to adjusted assets (as defined in the regulations). Management believes that, as of September 30, 2011, RJ Bank meets all capital adequacy requirements to which it is subject.

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 table below. There are no conditions or events since that notification that management believes have changed RJ Bank's category.

	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 September 30, 2011
Total capital (to risk-weighted assets)	$	1,018,858		13.7	%	$	595,165		8.0	%	$	743,956		10.0	%
Tier I capital (to risk-weighted assets)		925,212		12.4	%		297,582		4.0	%		446,374		6.0	%
Tier I capital (to adjusted assets)		925,212		10.3	%		360,961		4.0	%		451,202		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 1 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 discussion below), the Total Capital (to risk-weighted assets) ratio and the Tier 1 Capital (to adjusted assets) ratio decreased from 14.2% and 12.1%, respectively, at September 30, 2010 to 13.7% and 10.3%, respectively, at September 30, 2011. The decrease in both ratios was due to $100 million in dividends declared and paid to RJF during fiscal year 2011, partially offset by corporate loan growth, earnings and $25 million of capital contributions received from RJF during this same period.

Our previously stated intention remains to maintain RJ Bank's “well capitalized” status and we consider it unlikely that RJ Bank would experience anything other than “well capitalized” status. RJ Bank maintains a total capital to risk-weighted assets ratio of at least 12% in accordance with the minimum established in its internal policy. In the unlikely event that RJ Bank experienced other than a “well capitalized” status, the consequences of such an occurrence could include a requirement to obtain a waiver prior to acceptance, renewal, or rollover of brokered deposits and higher FDIC premiums, but would not have a significant impact on our operations.

RJ Bank's ability to pay cash dividends is dependent upon its maintenance of its “well capitalized” status and is subject to 30-day notification and approval by the FRB. The FRB regulates all capital distributions, including dividend payments. RJ Bank must either file an application seeking approval of the FRB or provide them with proper notification, depending on whether the proposed amount of the capital distribution exceeds RJ Bank's net income for the applicable calendar year to date plus RJ Bank's retained net income for the preceding two calendar years.

To be a Qualified Thrift Lender (“QTL”), RJ Bank must meet certain standards in accordance with the Domestic Building and Loan Association (“DBLA”) test. On September 30, 2011, RJ Bank was granted an exception to the QTL requirement until September 29, 2012. As of September 30, 2010, RJ Bank was in compliance with QTL standards according to the DBLA test. This test requires RJ Bank to meet a “business operations test” and a point-in-time “60% of assets test” on the last day of each fiscal year. The business operations test requires the business to consist primarily of acquiring the savings of the public and investing in loans. The 60% of assets test requires that at least 60% of the assets consist of qualifying assets that thrifts normally hold pursuant to regulations. As of September 30, 2010, RJ Bank met both the business operations test and the 60% of assets test with 62% of its assets consisting of qualifying assets. To meet this point-in-time percentage of assets requirement, RJ Bank held an additional $3.5 billion in qualifying assets, funded by a combination of an overnight FHLB advance, deposits from affiliates, and RJBDP deposits. The deposits from affiliates were withdrawn and the borrowing was repaid on October 1, 2010. The RJBDP deposits were redirected in early October, 2010 to other RJBDP participating banks. After RJ Bank's expected conversion from a thrift charter to a national bank charter, RJ Bank will no longer be subject to the QTL requirement.

Raymond James Trust, N.A., (“RJT”) is regulated by the OCC and is required to maintain sufficient capital and meet capital and liquidity requirements. As of September 30, 2011, RJT met the requirements.

RJF expects to continue paying cash dividends. However, the payment and rate of dividends on our common stock is subject to several factors including our operating results, financial requirements, and the availability of funds from our subsidiaries, including the broker-dealer and bank subsidiaries, which may be subject to restrictions under the net capital rules of the SEC, FINRA and the IIROC as well as loan covenants in the broker-dealer loan agreements; and RJ Bank, which may be subject to restrictions by bank regulators. Such restrictions have never limited our dividend payments.