Division of Trading and Markets Broker-Dealer Net Capital and Books and Records Guidance

Office of Broker-Dealer Finances Guidelines

• Broker-Dealer Notices and Reports
• PCAOB Registration of Broker-Dealer Auditors Frequently Asked Questions

Related No-Action, Exemptive, and Interpretive Letters

Broker-Dealer Books and Records and Reporting Requirements

• Financial Industry Regulatory Authority, re: Broker-dealers Operating Under a Series LLC Structure (September 1, 2009)
• Omgeo, re: Request for No-action Relief from Rule 17a-3(a)(8) and Rule 17a-4 (March 19, 2009)
• Financial Industry Regulatory Authority, re: Request for No-action Relief from Rule 17a-4 for Certain Form Filings Made on Web CRD (February 19, 2008)
• Securities Industry Association, re: Financial Recordkeeping and Reporting of Currency and Foreign Transactions / Broker-Dealer Customer Identification Rule (July 11, 2006)
• Securities Industry and Financial Markets Association, re: Request for Temporary No-Action Relief from Exchange Act Rules 17a-3, 17a-25, and 17a-5 Relative to NASDAQ's Commencement of Operation as an Exchange (December 29, 2006)
• Securities Industry Association, re: Request for Temporary No-Action Relief from Exchange Act Rules 17a-3 and 17a-25 Relative to NASDAQ's Commencement of Operation as an Exchange (July 31, 2006)
• New York Stock Exchange, Inc., and NASD Regulation, Inc., re: Annual Audited Financial Statement Filing Requirements Under Rule 17a-5 (Dec. 16, 2005)
• Securities Industry Association, re: Permissibility of Sending Financial Statements with Quarterly Customer Statements (Feb. 26, 2001)
  (incoming letter also available)
• Chicago Board Options Exchange, Inc., re: Extension of Time for Certain Floor Traders to File Annual FOCUS Reports (Jan. 5, 2000)
  (incoming letter also available)
• New York Stock Exchange, Inc., re: Prime Broker Arrangements between Broker-Dealers & Certain Investment Advisers, (permanent extension of the 1994 prime broker no action letter) (Dec. 30, 1999)
  (incoming letter also available)
• Prime Broker Committee, re: Prime Broker Committee Request (Jan. 25, 1994)
  (two incoming letters also available: Sept. 13, 1989 and June 3, 1991)

Broker-Dealers Customer Protection Rule - Rule 15c3-3

• National Financial Services LLC, Re: Cash in a Customer Reserve Account under Rule 15c3-3(e)(5), March 8, 2018
• National Securities Clearing Corporation, re: Investment of Funds in NSCC's Long Free Account, December 1, 2016
• NYLIFE Securities LLC, re: Promptly Transmitting Customer Funds in Connection with Sales of Securities on a Subscription-Way Basis, March 12, 2015
• Securities Industry and Financial Markets Association, Re: Certain Amendments to Rule 15c3-3, February 5, 2015
• Financial Industry Regulatory Authority, Re: Broker-Dealers Holding Cash in a Reserve Account at a Non-Affiliated U.S. Branch of a Foreign Bank under Rule 15c3-3, February 26, 2014
• Securities Industry and Financial Markets Association, Re: Certain Amendments to Rule 15c3-3, February 26, 2014
• Securities Industry and Financial Markets Association (December 21, 2012)
• Financial Industry Regulatory Authority, Inc. (December 10, 2012)
• Charles Schwab & Co., Inc., re: No-Action Request with Respect to the Possession and Control of Securities Processed through the NSCC Alternative Investment Products Service (February 3, 2012)
• Morgan, Lewis & Bockius LLP, re: No-Action Request of Sanford C. Bernstein & Co., LLC (June 9, 2009)
• Lawrence, Kamin, Saunders & Uhlenhop, re: Clearing Government Securities Transactions for Registered Floor Persons (Dec. 27, 2000)
  (incoming letter also available)
• Options Clearing Corporation, re: Definition of "Customer" for Purposes of the Hypothecation Rules (Jun. 15, 2000)
  (incoming letter also available)
• New York Stock Exchange, Inc., and NASD Regulation, Inc., re: Proprietary Accounts of Introducing Brokers and Dealers (Nov. 3, 1998)
• Cantor Fitzgerald Securities, re: Treatment of OTC Treasury Options Matched Book Collateral for Cantor Fitzgerald Securities (Oct. 7, 1998)
  (incoming letter also available)
• New York Stock Exchange, Inc. re: Responsibilities of Clearing and Introducing Firms, (Jan. 14, 1985)

Broker-Dealers Net Capital Requirements - Rule 15c3-1

• Securities Industry and Financial Markets Association (December 21, 2012)
• Financial Industry Regulatory Authority, Inc. (December 10, 2012)
• Financial Industry Regulatory Authority, Inc., re: Definition of "Ready Market" with regard to Foreign Equity Securities pursuant to Rule 15c3-1(c)(11)(i) (November 28, 2012)
• Chicago Board Options Exchange, Inc. and Financial Industry Regulatory Authority, Inc., re: Security Futures under Appendix A to Exchange Act Rule 15c3-1 (May 4, 2012)
• New York Stock Exchange, Inc., and NASD Regulation, Inc., re: Short Option Value Charge, (Feb. 7, 2006)
• Securities Industry Association, re: Temporary Relief from Certain Provisions of the Net Capital Rule, (Feb. 19, 2004)
  (incoming letter also available)
• Fimat USA, Inc., re: Short Option Value Charge Relief for Options on Interest Rate Futures (Jan. 5, 2004)
  (incoming letter also available)
• New York Stock Exchange, Inc., and NASD Regulation, Inc., re: Recording Certain Broker-Dealer Expenses and Liabilities (Jul. 11, 2003)
• Securities Industry Association, re: Net Capital Treatment of Failed to Deliver Contracts in Non-Marketable Securities Outstanding Less than 30 Business Days (Jul. 13, 2001)
  (incoming letter also available)
• Securities Industry Association, re: Marketability of Asset-Backed Securities Issued by Special Purpose Vehicles (Jul. 13, 2001)
  (incoming letter also available)
• Man Financial, Inc., re: Request for Relief from the Short Option Value Charge (Apr. 19, 2001)
  (incoming letter also available)
• Depository Trust Company, re: Net Capital Treatment of Class A Preferred Stock Issued by the Depository Trust Company (Aug. 21, 2000)
  (incoming letter also available)
• Securities Industry Association, re: Portfolio Concentration Charges for Certain Securities Under Rule 15c3-1 of the Securities Exchange Act of 1934 (certain debt securities and preferred stock) (Jul. 27, 2000)
  (incoming letter also available)
• Securities Industry Association, re: Marketability of Certain Securities (below-investment-grade-rated and single-rated debt securities and preferred stock) (Jul. 27, 2000)
  (incoming letter also available)
• ABN AMRO, Inc., and Rothschild, Inc., re: Deductions for Open Contractual Commitments (Jun. 30, 2000)
  (incoming letter also available)
• New York Stock Exchange, Inc., and NASD Regulation, Inc., re: Net Capital Treatment of Temporary Capital Contributions (Feb. 23, 2000)
• Chicago Board Options Exchange, Inc., re: Extension of Subparagraph (b)(1)(iv) of Appendix A to Rule 15c3-1 of the Securities Exchange Act of 1934 (listed options and related hedge positions) (Jan. 13, 2000)
  (incoming letter also available)
• New York Stock Exchange, Inc., re: Net Capital Treatment for Foreign Issued, Foreign Settled Fail Items (Dec. 30, 1999)
  (incoming letter also available)
• Charles Schwab & Co., Inc., re: Net Capital Treatment of Deferred Tax Liabilities Directly Related to Capitalized Costs Associated With Internal Software Development (Oct. 25, 1999)
  (incoming letter also available)
• Advanced Clearing, Inc., re: Net Capital Treatment of Deferred Tax Liabilities Directly Related to Prepaid Advertising Expense (Oct. 25, 1999)
  (incoming letter also available)
• Chicago Board Options Exchange, Inc., re: Short Futures Options Value Charge (Feb. 25, 1999)
  (incoming letter also available)
• Chicago Board Options Exchange, Inc., re: Computation of Equity by Broker-Dealers Carrying Market-Maker Accounts of Listed Options Specialists (Jan. 19, 1999)
  (incoming letter also available)
• Integrated Management Solutions, re: Capital Treatment of Options Hedged with Convertible Securities (Jul. 8, 1998)
  (incoming letter also available)
• Government Securities Clearing Corporation, re: Deficit Charges on Repurchase Transactions (Apr. 1, 1998)
  (incoming letter also available)
• Securities Industry Association, re: Treatment of Certain Non-Registered Securities (Mar. 15, 1996)
• Securities Industry Association re: Ready Marketability of Noninvestment Grade, Nonconvertible Debt Securities, (Feb. 14, 1994)
• Securities Industry Association, re: Applicability of Certain Haircut Provisions to Certain Foreign and Domestic Debt Securities (Jun. 12, 1992)
  (two incoming letters also available: Aug. 14, 1990 and Nov. 12, 1989)

Regulation T

• Morgan Stanley and Citigroup Inc. (May 12, 2009)

Risk Assessment Rules - Rules 17h-1T and 17h-2T

• Securities Industry Association, re: Rules 17h-1T, 17h-2T (Sep. 20, 1993)
  (incoming letter also available)

Commission Releases

• Notice of Filing of Amendment Nos. 1 and 2 to the Proposed Rule Change Relating to Customer Portfolio Margining; Order Granting Accelerated Approval to the Proposed Rule Change, as Amended (December 12, 2006; File name: 34-54919.pdf)
• Order Approving a Proposed Rule Change to Rule 431 ("Margin Requirements") and Rule 726 ("Delivery of Options Disclosure Document and Prospectus"), and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 1 to the Proposed Rule Change Relating to Customer Portfolio Margining (December 12, 2006; File name: 34-54918.pdf)
• Order: Extension of Order Regarding Broker-Dealer Financial Statement Requirements under Section 17 of the Exchange Act (December 12, 2006; File name: 34-54920.pdf)
• Order: Extension of Order Regarding Broker-Dealer Financial Statement Requirements under Section 17 of the Exchange Act (December 7, 2005; File name: 34-52909.pdf)
• Order: Extension of Order Regarding Broker-Dealer Financial Statement Requirements under Section 17 of the Exchange Act (July 14, 2004; File name: 34-50020.htm)
• Commission Notice: Broker-Dealer Financial Statement Requirements under Section 17 of the Exchange Act (Aug. 4, 2003; File name: 34-48281.htm)
• Final Rule: Broker-Dealer Exemption from Sending Certain Financial Information to Customers (Aug. 1, 2003; File name: 34-48272.htm)
• Concept Release: Rating Agencies and the Use of Credit Ratings Under the Federal Securities Laws (June 4, 2003; File name: 33-8236.htm)
• Interpretive Release: Electronic Storage of Broker-Dealer Records (May 7, 2003; File name: 34-47806.htm)
• Exemptive Order: Extending Broker-Dealer Exemption from Sending Financial Information to Customers (Nov. 26, 2002; File name: 34-46921.htm)
• Final Rule: Books and Records Requirements for Brokers and Dealers Under the Securities Exchange Act of 1934 (Oct. 26, 2001; File name: 34-44992.htm)
• Final Rule: OTC Derivatives Dealers (Oct. 23, 1998; File name: 34-40594.htm)
• Proposed Rule: Definition of Nationally Recognized Statistical Rating Organizations (Dec. 17, 1997; File name: 34-39457.txt)
• Final Rule: Electronic Recordkeeping: Reporting Requirements for Brokers or Dealers under the Securities Exchange Act of 1934 (Feb. 5, 1997; File name: 34-38245.txt)
• Concept Release: Nationally Recognized Statistical Rating Organizations (Aug. 31, 1994; File name: 34-34616.pdf)
• Final Temporary Risk Assessment Rules (July 21, 1992; File name: 34-30929.pdf)
• Proposed Temporary Risk Assessment Rules (Sep. 6, 1991; File name: 34-29635.pdf)
• Interpretative Release: Guidelines for Control Locations for Foreign Securities (Oct. 12, 1973; File name: 34-10429.pdf)

Selected Statutory Provisions and Rules

• Risk Assessment: Section 17(h) (scroll down to Paragraph (h))
• Net Capital Rule: Rule 15c3-1
• Customer Protection Rule: Rule 15c3-3
• Records to be Made by Broker-Dealers: Rule 17a-3
• Records to be Preserved by Broker-Dealers: Rule 17a-4
• Broker-Dealer FOCUS Reports and Annual Audits: Rule 17a-5
• Early Warning Rule: Rule 17a-11
• Risk Assessment Rules: Rule 17h-1T; Rule 17h-2T