Financial Records
Dealers are required to carry a minimum amount of capital to meet their ongoing financial obligations. These net capital requirements are imposed to measure a firm’s financial viability and to protect customers and other creditors from insolvent firms. Dealers must calculate their net capital daily to make sure they can meet these minimum requirements, which differ for introducing firms, clearing firms, broker’s brokers, and dealers. They must record these daily calculations and maintain them.
Dealers should maintain ledgers reflecting all assets, liabilities, income, expenses, capital accounts, and moneys borrowed and loaned. In addition, a dealer should record proof of the money balances of all ledger accounts in the form of trial balances (bookkeeping worksheets) prepared at least once a month.
Exercise
Answer true or false.
- 1. True or false: Blotters are monthly records containing itemized reports of all purchases and sales of securities, receipts and deliveries of certificates, receipts and disbursements of cash, and all other debits and credits having to do with municipal securities.
- 2. True or false: Dealers must maintain a general ledger, which is an historical record of a dealer’s securities transactions for each of its customer accounts.
- 3. True or false: In an agency order in which the dealer buys or sel