A 4789 - June 24, 1998
P&S 4351
TO: ALL PARTICIPANTS
ATTENTION: MANAGING PARTNER/ OFFICER, OPERATIONS PARTNER/ OFFICER
SUBJECT: CHANGES IN MEMBERSHIP STANDARDS
On June 10, 1998, the Securities and Exchange Commission approved a rule change filed by National Securities Clearing Corporation ("NSCC") amending NSCC's membership standards to increase the amount of net capital required over the Commission's minimum net capital requirements ("excess net capital").(1) Specifically, the approved rule change (i) increases the excess net capital requirement for full service Members to $500,000, except for Municipal Securities Brokers' Brokers (2) for which the excess net capital requirement will be $100,000 (3) and (ii) increases the excess net capital requirement for Members that clear for other broker-dealers to $1,000,000.
The SEC's approval order states that these new standards will become effective on September 29, 1998, which is one year from the date of publication in the Federal Register of the Commission's notice of the filing of the rule change. Firms that anticipate that as of September 29, 1998 they will neither meet the new requirements nor have implemented an alternative clearing arrangement, should contact Peter Axilrod, Managing Director/Membership, Surveillance and Risk Management, at (212) 412-8567, Ellen Levine, Managing Director/Surveillance and Risk Management, at (212) 412-8861 or Roman Kaniuga, Director/Financial Surveillance, at (212) 412-8516.
The text of the rule change may be obtained by contacting the NSCC Legal Department at (212) 412-8634.
Robert J. Woldow
Managing Director and General Counsel
(1) The Commission's minimum net capital requirements are set forth in Rule 15c3-1(a) of the Securities and Exchange Act of 1934, as amended (the "Act").
(2) Municipal Securities Brokers' Broker is defined in Rule 15c3-1(a)(8) of the Act.
(3) NSCC believes this is consistant with the Commission's approach of maintaining separate capital rules for Municipal Securities Brokers' Brokers.