Net Capital Requirements for Broker-Dealers

PURPOSE: This rule prescribes the minimum net capital and ratio between net capital and aggregate indebtedness required of registered broker-dealers. (1) A broker-dealer shall have the net capital necessary to comply with all of the following conditions: (A) The aggregate indebtedness to all other persons of a broker-dealer who has been registered under section 409.850, RSMo shall not exceed one thousandth percent (.001%) of his/her net capital; and (B) S/he shall have and maintain net capital of not less than twenty thousand dollars ($20,000). (2) The commissioner, by order, which may apply individually or to a class, may establish a lower net capital requirement, a lower cash reserve requirement or a higher maximum ratio of aggregate indebtedness to net capital either unconditionally or upon special terms or conditions, for a broker-dealer who satisfied the commissioner that because of the special nature of his/her business and his/her financial condition and the safeguards that have been established for the protection of customers’ funds, investors would not be adversely affected. (3) A broker-dealer not in compliance with the aggregate indebtedness, net capital or cash reserve requirements shall cease soliciting new business and immediately shall notify the commissioner in writing. (4) For the purposes of this rule and to insure uniform interpretation, the terms, aggregate indebtedness and net capital shall have the respective meanings as defined in rule15c3-1 under the Securities Exchange Act of 1934. A copy of any pertinent subordination agreement shall be filed with the commissioner within ten (10) days after agreement has been entered into and shall meet the requirements of a satisfactory subordination agreement as that term is defined in rule 15c3-1. AUTHORITY: section 409.858, RSMo 1986.* This rule was previously filed as 15 CSR 3060.050. Emergency rule filed Oct. 2, 1985, effective Oct. 12, 1985, expired Feb. 9, 1986. Original rule filed Aug. 22, 1986, effective Jan. 30, 1987. *Original authority: 409.858, RSMo 1985.