§ 405.3 Notification provisions for certain registered government securities brokers and dealers. ( a ) Every registered government securities broker or dealer, other than a government securities interdealer broker that is subject to the financial responsibility requirements of § 402.1(e) and a government securities broker or dealer that is also a futures commission merchant registered with the CFTC, shall comply with the requirements of § 240.17a-11 of this title (SEC Rule 17a-11), with the following modifications: ( 1 ) References to “broker or dealer” include registered government securities brokers and dealers.
( 2 ) References to § 240.15c3-1, relating to net capital, mean § 402.2 of this chapter.
( 3 ) References to “net capital” mean “liquid capital” as defined in § 402.2 of this chapter.
( 4 ) References to § 240.17a-5, relating to reports and audit, mean § 405.2(a) of this chapter.
( 5 ) Section 240.17a-11(c), for the purposes of this section, is modified to read as follows: “(c) Every registered government securities broker or dealer shall send notice promptly (but within 24 hours) in accordance with paragraph (g) of this section if a computation made pursuant to the requirements of § 402.2 of this title shows, at any time during the month, that its liquid capital is less than 150 percent of total haircuts, determined in accordance with § 402.2 of this title, or that its capital after deducting total haircuts from liquid capital is less than 120 percent of the registered government securities broker or dealer's minimum capital requirement specified in § 402.2 (b) or (c) of this title as applicable.”
( 6 ) References to § 240.17a-3, relating to records, mean § 404.2 of this chapter.
( b ) A government securities interdealer broker that is subject to the financial responsibility requirements of § 402.1(e) of this chapter shall comply with the requirements of § 240.17a-11 of this title (SEC Rule 17a-11), with the following modifications: ( 1 ) References to “broker or dealer” include government securities interdealer brokers;
( 2 ) References to § 240.15c3-1, relating to net capital, include the modifications contained in § 402.1(e) of this chapter.
( 3 ) References to “net capital” mean net capital calculated as provided in § 402.1(e) of this chapter.
( 4 ) References to § 240.17a-5, relating to reports and audit, mean § 405.2(b) of this chapter.
( 5 ) References to § 240.17a-3, relating to records, mean § 404.2 of this chapter.
( c ) A registered government securities broker or dealer that is also a futures commission merchant registered with the CFTC shall comply with the requirements of § 240.17a-11 of this title (SEC Rule 17a-11), with the following modifications: ( 1 ) References to “broker or dealer” include government securities brokers and dealers.
( 2 ) References to § 240.15c3-1, relating to net capital, mean either § 240.15c3-1 or § 1.17 of this title, depending on which computation results in the higher net capital requirement.
( 3 ) References to “net capital” mean the higher of net capital calculated under § 240.15c3-1 or § 1.17 of this title.
( 4 ) References to § 240.17a-5, relating to reports and audit, mean § 405.2(c) of this chapter.
( 5 ) Section 240.17a-11(c) for the purposes of this section is modified to read as follows: “(c) Every broker or dealer shall send notice promptly (but within 24 hours) after the occurrence of the events specified in paragraphs (c)(1), (c)(2), (c)(3), or (c)(4) of this section in accordance with paragraph (g) of this section:”
( 6 ) A new paragraph 240.17a-11(c)(4) is added to read as follows: “(4) If a computation made by a government securities broker or dealer that is not a registered broker or dealer but that is also a futures commission merchant registered with the Commodity Futures Trading Commission shows that: “(i) The adjusted net capital of such entity is less than the greater of: “(A) 150 percent of the appropriate minimum dollar amount required by § 1.17(a)(1)(i), or “(B) 6 percent of the following amount: The customer funds required to be segregated pursuant to § 4d(2) of the Commodity Exchange Act and § 1.17 of this title, less the market value of commodity options purchased by option customers on or subject to the rules of a contract market, provided, however, the deduction for each option customer shall be limited to the amount of customer funds in such option customer's account; or “(ii) At any point during the month, aggregate indebtedness is in excess of 1200 percent of net capital or total net capital is less than 120 percent of the minimum net capital required.”
( 7 ) References to § 240.17a-3, relating to records, mean § 404.2 of this chapter.
(Approved by the Office of Management and Budget under control number 1535-0089) [52 FR 27954, July 24, 1987, as amended at 59 FR 53731, Oct. 26, 1994; 59 FR 55910, Nov. 9, 1994; 60 FR 18734, Apr. 13, 1995]