Rule 326(d). Reduction of Elimination of Loans and Advances
This rule is no longer applicable. Incorporated NYSE Rule 326 has been superseded by FINRA Rule 4120. Please consult the appropriate FINRA Rule.
Except with the prior written approval of the Exchange, a member organization which has outstanding any unsecured or partly secured loans or advances of funds, or guarantees of obligations of the nature described in (c)(1) through (4) above, shall forthwith reduce or eliminate such unsecured or partly secured amounts due from such borrowers, or otherwise restore its capital to a point where the conditions described in (c)(1) through (4) did not exist, if any of the following conditions exist at the member organization:
(1) Its net capital is less than 125 percent of its net capital minimum dollar amount requirement, or some greater percentage as may from time to time be designated by the Exchange, or
(2) If subject to this requirement, its aggregate indebtedness is more than 1,200 percent of its net capital, or
(3) If the net capital of a member organization that uses the alternative method of computing net capital pursuant to Exchange Act Rule 15c3-1(a)(1)(ii) in lieu of (2) above is less than four percent of the aggregate debit items in the Formula for Determination of Reserve Requirements for Brokers and Dealers under Exchange Act Rule 15c3-3, or
(4) If the net capital of a member organization that is registered as a Futures Commission Merchant pursuant to the Commodity Exchange Act is less than 110% of the minimum risk-based capital requirements of Commodity Exchange Act Rule 1.17.
(5) Capital withdrawals including maturities scheduled during the next six months would result in the condition described in (1), (2), (3) or (4) above.
| Adopted. December 12, 1974. Amendments. October 16, 1975; effective January 1, 1976. May 1, 1982. March 29, 2007 (NYSE-2005-03). |
• • • Supplementary Material: --------------
.10 Expansion of business
For the purpose of this rule, expansion of business shall mean:
For the purpose of this rule, expansion of business shall mean:
(a) net increase in the number of registered representatives or other producing personnel,
(b) exceeding average commitments over the previous three months for market making or block positioning,
(c) initiation of market making in new securities or any new firm trading or other commitment in securities or commodities in which a market is not made (other than riskless trades associated with customer orders),
(d) exceeding average commitments over the previous three months for underwritings,
(e) opening of new branches,
(f) entering any new line of business or deliberately promoting or expanding any present lines of business,
(g) such other measures as the Exchange may determine.
| Adopted. July 15, 1971. |
.11 Business reduction
For the purposes of this rule, the term "business reduction" shall mean reducing or eliminating parts of a member organization's business in order to reduce the amount of capital required, such as disposing of branch offices, reducing trades, reducing or ceasing market making or underwriting, introducing accounts on a disclosed basis, and the like.
For the purposes of this rule, the term "business reduction" shall mean reducing or eliminating parts of a member organization's business in order to reduce the amount of capital required, such as disposing of branch offices, reducing trades, reducing or ceasing market making or underwriting, introducing accounts on a disclosed basis, and the like.
| Adopted. July 15, 1971. |
.12 Business with restricted organization
The prohibitions of this rule shall apply to any member organization which introduces accounts on a disclosed basis to or clears on omnibus basis through another member organization which is prohibited from expanding or required to reduce its business under this rule, insofar as such business would be handled by such carrying or clearing member organization.
The prohibitions of this rule shall apply to any member organization which introduces accounts on a disclosed basis to or clears on omnibus basis through another member organization which is prohibited from expanding or required to reduce its business under this rule, insofar as such business would be handled by such carrying or clearing member organization.
| Adopted. July 15, 1971. |
.13 Subordination agreements
For the purposes of increasing an organization's total subordinated liabilities and capital available as protection to customers, a member organization may enter into subordination agreements which are not allowed as good capital under Rule 325. Such agreements may place at the risk of the business margin accounts, securities, collateral in excess of face value of Secured Demand Notes, partners' personal accounts and the like. Such subordinations must be in a form acceptable to and filed with the Exchange and must be shown separately in financial statements and similar documents.
For the purposes of increasing an organization's total subordinated liabilities and capital available as protection to customers, a member organization may enter into subordination agreements which are not allowed as good capital under Rule 325. Such agreements may place at the risk of the business margin accounts, securities, collateral in excess of face value of Secured Demand Notes, partners' personal accounts and the like. Such subordinations must be in a form acceptable to and filed with the Exchange and must be shown separately in financial statements and similar documents.
| Adopted. July 15, 1971. |