What's the requirement of stock brokers about their capital?

Question

What's the requirement of stock brokers about their capital?

Answer 1

All broker-dealer firms are required to maintain a certain amount of net capital in their business to service their customers. On a monthly or quarterly basis, firms must file a FOCUS report with FINRA that includes their net capital. The net capital amount varies from firm to firm as a result of size and the type of business the firm conducts. Net capital has a very specific definition and many assets are excluded from the calculation, like fixed asset and related party receivables. Cash and investments are the driving force behind net capital.

If a firm violates the net capital requirement, FINRA will monitor the situation and will step in quickly if the firm isn't complying.

Answer 2

Stock brokers do not have to worry about their capital since they are employees of a broker/dealer

The capital requirements of broker/dealers is not as important as their net capital   Net capital is the firms total capitalization less all non allowable assets.  Non allowable assets are all non cash item, and those assets that can not be converted to cash within thirty days - there are other break downs that need not be covered here.

Brokerage firms have several levels of net capital requirements based on the type of business they are doing.

Most firms with no employees and doing business in  primarily mutual funds must maintain their net capital at $25000, firms that handle money for customers, must have a minimum net capital of $250,000.  

Firms that take down positions will require additional net capital requirements.