Key. SEC Financial Responsibility Rules

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Appendix 11Key. SEC Financial Responsibility RulesThe SEC Net CapitalRule(Rule15c3-1)BackgroundThe Securities and Exchange Commission's(SEC)1uniform net capital rule(15c3-1) and customer protection rule (15c3-3) form the foundation of thesecurities industry's Financial Responsibility framework.' The net capitalrule focuses on liquidity and is designed to protect securities customers,counterparties, and creditors by requiring that broker-dealers havesufficient liquid resources on hand at all times to satisfy claims 15c3-3, or the customer protection rule, which complements rule15c3-1, is designed to ensure that customer property (securities and funds)in the custody of broker-dealers is adequately safeguarded. By law, both ofthese Rules apply to the activities of registered broker-dealers, but not tounregistered the net capital rule (Rule 15c3-1) in 1975 to establish uniformnet capitalstandardsfor brokers anddealers'registered withSECunderSection 15(b) of the Securities Exchange Act of 1934 (Exchange Act).

Appendix 11 Key. SEC Financial Responsibility Rules The SEC Net Capital Rule (Rule 15c3-1) Background The Securities and Exchange Commission's (SEC)1 uniform net capital rule (15c3-1) and customer protection rule (15c3-3) form the foundation of the

  Rules, Capital, Financial, Net capital rule, Sec net capital rule, Sec financial