NASD Notice to Members 98-019 - February 1998

SEC Requests Comment on Proposed Amendments to Net Capital Rule

Executive Summary

The Securities and Exchange Commission (SEC) is requesting comment on proposed amendments to Rule 15c3-1, the Net Capital Rule. The SEC proposes to create a new category of broker/dealer for affiliates conducting an OTC derivatives business that would have special capital, margin, and other regulatory requirements. Comments on this proposal are due by March 2, 1998. Also, comments are due by March 2, 1998, on the SEC’s proposed definition for designating an organization as a “nationally recognized statistical rating organization” (NRSRO), and by March 30, 1998, on changes to the haircuts for certain interest rate instruments held in a broker/dealer’s proprietary account. In addition, the SEC is soliciting comment on its Concept Release in which the SEC is considering possible alternative methods for calculating credit and market risk capital requirements for broker/dealers. Specifically, the SEC seeks comment on whether the Net Capital Rule should be amended to allow broker/dealers to use statistical models to calculate net capital requirements. Comments on the Concept Release are due by March 30, 1998.