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Net Capital Rule - A Concept Release
II. Alternatives to the Current Financial Responsibility Regime
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The Commission is soliciting comment on possible alternative methods for calculating credit and market risk capital requirements for broker-dealers. This release will help the Commission evaluate different ways the net capital rule could be modified to accommodate changes in the securities business since the current uniform net capital rule was adopted in 1975,with a particular emphasis on incorporating modern risk management techniques. In this regard, the Commission believes it can modernize the Rule by either amending the current haircut percentages or by allowing certain broker-dealers to use a model-based system to calculate appropriate capital charges for market risk. This section discusses each of the alternative structures and lists relevant questions.
A. Modify Current Haircut Approach
B. Model Based Approach
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Net Capital Rule - A Concept Release
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