Other Types of Brokers
If a broker-dealer does not receive or hold funds or securities for customers, owe funds or securities to customers, or carry accounts for customers, it must maintain net capital of $5,000 at a minimum. This category includes direct participation programs (DPPs) and broker-dealers that engage exclusively in mergers and acquisitions.
Broker-dealers that engage in riskless principal transactions and do not meet the definition of a dealer also need only maintain a minimum of $5,000 in net capital. A riskless principal transaction occurs when a broker fills an order from a customer by buying the security from a dealer but, instead of immediately delivering the security to the client, puts it into a riskless principal account. The broker then sells the security from this account to the customer at a markup. This type of transaction is called a principal transaction because the broker-dealer has traded from its own account and added a markup. It is riskless because the firm can immediately sell the security.
SEC Rule 15c3-1(a)(2)(vi)
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Minimum Net Capital Requirement |
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Type of Broker |
Minimum Net Capital Requirement |
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Carrying firms that carry accounts and hold custody of client assets |
$250,000 |
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Firms that carry accounts but do not hold custody of client assets |
$100,000 |
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Introducing f | |