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Alternative Net Capital Requirements For Broker Dealers That Are Part of Consolidated Supervised Entities

ABA Contact: Beth Climo 202-663-5347
Published: 68 Federal Register 62872 November 6, 2003
Comments Due: February 4, 2004
Disposition: Filed

The Proposed Rule would impose new requirements on holding companies that own a broker dealer and seek to take advantage of the alternative broker-dealer capital requirement. For example, the affiliates of a broker-dealer within such a holding company generally would have to agree to Commission examination of their books and records, required reporting to the Commission, and certain standards related to capital and risk management established by the Commission. The Proposed Rule recognizes, however, that in some circumstances it would be neither desirable nor necessary to extend at least some of the proposed new requirements to an affiliate of a broker-dealer that is already subject to an appropriate level of examination and supervision by another regulatory agency.

As a general matter, ABASA strongly supports the animating principle of the Proposed Rule; the availability of the benefits of the proposed alternative capital treatment to broker-dealers owned by bank holding companies; and the general recognition that, because of the nature of their regulation, bank holding companies should not be subject to all of the same regulatory requirements as unregulated affiliates of broker-dealers. Nevertheless, we remain very concerned that the Proposed Rule does not go far enough to recognize the existing regulation already applicable to bank holding companies through their consolidated examination, reporting, capital, and risk management requirements – all of which are applicable to bank holding companies under the Federal Reserve's regulations implementing the Basel regime that the Proposed Rule appropriately recognizes as its model.

2004 Regulations Chart
Federal Register
Comment Letter