Series 14: 4.1.1.2. Ratio Requirement

Taken from our Series 14 Online Guide

4.1.1.2. Ratio Requirement

Typically, the ratio requirement is based on a firm’s aggregate indebtedness. Aggregate indebtedness is made up of liabilities that are not secured by any of the firm’s assets. This is the amount that a firm must pay its unsecured creditors if it were to liquidate. Aggregate indebtedness includes:

• Loans that are backed by customer securities

• Customer credit balances

• Accounts payable

Aggregate indebtedness does not include loans that are backed by firm securities.

There are different ratio requirements for first-year firms and established firms. Broker-dealers that have operated for one year or less must ensure that their aggregate indebtedness is not more than eight times the amou

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