Q: Are ALL broker/dealers required to have a person with the Series 28 or Series 27 registered with the firm?
A: YES. All exemptions have been eliminated for not having a FINOP registered with every firm.
Q: Are broker/dealers allowed to outsource the FINOP responsibilities?
A: Yes! Broker/dealers are not precluded from hiring an "off-site" FINOP. In fact, outsourcing FINOP work not only satisfies regulatory requirements, it often makes more sense. The FINOP of a broker/dealer, even if located off-site, is ultimately responsible for the books and records of the firm. Making sure that adequate controls are in place to ensure timely financial reporting, and maintaining accurate books and records are the important issues.
Q: Does my firm need a Series 27 or Series 28 FINOP?
A: That depends on your firm's business and net capital requirements. The Series 27 registration qualifies an individual as a "Financial and Operations" Principal. Any firm operating pursuant to the $100,000 minimum net capital requirement or higher must have a Series 27 FINOP. The Series 28 registration qualifies an individual as an "Introducing Broker/Dealer Financial and Operations" Principal. Any firm operating to the $50,000 minimum net capital requirement or lower may have a Series 28 FINOP. However, a Series 27 FINOP satisfies the requirements for any firm. Both registrations are known as "Limited Principal" designations.
Q: What happens if a broker/dealer's FINOP resigns?
A: The immediate task at hand is to find a replacement for the FINOP. This task can be accomplished in different ways, but the easiest and most cost effective is to call B/D Solutions Consulting. We have a staff of experienced FINOPs able to act as your FINOP on an interim or permanent basis. Our professionals specialize in the finance and accounting issues specifically encountered by brokerage firms. Another alternative is to appoint someone who is already registered with your Firm as the new FINOP. NASD rules permit a firm to change the responsibilities of a registered representative to those that require registration as a principal. However, the registered representative must pass the appropriate principal license within 90 calendar days following the change in duties that require registration as a principal. A final option is to hire someout outside the Firm as a full time, on-site FINOP.
Q: Is my Firm's entire clearing deposit an allowable asset?
A: Not necessarily. Only the amount that is required to be on deposit with the clearing firm is an allowable asset. Any amount in a clearing deposit account in excess of the required amount is treated as non-allowable.
Q: When does the 30 day period begin to determine if commission receivables are aged?
A: The 30 day period begins at the end of the calendar month in which the commission is earned.
Q: How many transactions may my firm execute in a proprietary account?
A: If your firm conducts more than 10 transactions in a calendar year in a proprietary account, it is required to maintain a minimum of $100,000 in net capital.
Q: How does the amount of aggregate indebtedness my firm carries affect our minimum net capital requirement?
A: The aggregate indebtedness for a broker/dealer may not exceed 1500% of its net capital. However, the threshold for aggregate indebtedness for a broker dealer within its first 12 months of business is 800% of its net capital.
Q: What should happen if my firm's net capital falls below 120% of its net capital requirement?
A: SEC Rule 17a-11 states that any broker/dealer whose net capital falls below 120% of its required minimum net capital must send notice within 24 hours to the SEC and its designated examining authority (DEA). Notice must be sent to the principal office of the SEC in Washington, DC and the regional office of the SEC for the region or district in which the broker/dealer has its principal place of business, and the principal office and district office of the broker/dealer's DEA. Notice must be given or transmitted by telegraphic notice or facsimile transmission.
Q: What is a fifth FOCUS report?
A: A fifth FOCUS report is an addional report that is due from a member whose fiscal year end is a date other than the calendar quarter. At the end of each year, the NASD publishes submission dates for these reports.
Q: Does the NASD require a net capital computation every month for new members?
A: If the broker/dealer is a new member, the NASD will require a net capital computation for the first three to six months of membership for the months the FOCUS is not due. (The quarterly FOCUS report already includes a net capital computation).
For further information call us today at 1-877-423-4636.
