The Financial Industry Regulatory Authority (FINRA) has issued Regulatory Notice 08-46 to provide interpretive guidance with respect to clearing deposits. Current Securities and Exchange Commission interpretation of Securities Exchange Act Rule 15c3-1 provides that a clearing deposit may be treated as an allowable asset in the computation of the introducing firm’s net capital, provided that the clearing agreement explicitly states that the deposit will be returned to the introducing firm within 30 calendar days after cancellation of the agreement, and the clearing agreement contains the language in the SEC No-Action letter on Proprietary Accounts of Introducing Brokers. Effective immediately, the interpretation of Rule 15c3-1 is amended to reflect that the 30calendar day period shall commence five business days after the date of the initial transfer out of customer accounts. The amount of any clearing deposit that is not returned to the introducing firm within 30 calendar days after the fivebusiness day grace period shall be treated as a non-allowable asset in the computation of the introducing firm’s net capital commencing on the 31st day.
Many clearing agreements contain a penalty clause that is triggered if the agreement is terminated before a certain date. During this period, the introducing firm must treat the amount of its clearing deposit up to the penalty amount as a non-allowable asset for net capital purposes. FINRA advised that if language specified in the Regulatory Notice subordinating the claim for the penalty amount to the claims of the introducing firm’s customers is added to the clearing agreement by January 2, 2009 the penalty amount in the clearing deposit may be treated as an allowable asset.