Quick Answer
Adjusted net capital, broadly current assets minus liabilities minus certain charges, must stay at or above a firm's minimum at all times. A Futures Commission Merchant must keep
Quick Answer: Adjusted net capital, broadly current assets minus liabilities minus certain charges, must stay at or above a firm's minimum at all times. A Futures Commission Merchant must keep $1,000,000, an independent Introducing Broker must keep $45,000, and a guaranteed Introducing Broker keeps none because its guarantor FCM assumes that responsibility.
,000,000, an independent Introducing Broker must keep $45,000, and a guaranteed Introducing Broker keeps none because its guarantor FCM assumes that responsibility.The three capital figures here are the single most-tested payoff of the guaranteed-versus-independent split, so anchor them before anything else.
Adjusted Net Capital, the Shared Yardstick
Financial responsibility for both firm types is measured the same way.
- Adjusted net capital: broadly, a firm's current assets minus its liabilities minus certain charges against capital. It is a conservative measure of the liquid cushion a firm keeps on hand.
- A firm must hold adjusted net capital at or above its required minimum at all times, not just on a reporting date. Dropping below the floor is a violation, even briefly.
The Three Figures to Know
Each registrant's minimum tracks how much customer risk it carries. The Futures Commission Merchant (FCM) holds customer funds and clears accounts, so it carries the largest requirement.
| Registrant | Minimum adjusted net capital |
|---|---|
| Futures Commission Merchant (FCM) | $1,000,000 |
| Independent Introducing Broker (IB) | $45,000 |
| Guaranteed Introducing Broker (IB) | None (guarantor FCM assumes financial responsibility) |
- The FCM carries the largest minimum, $1,000,000, because it holds customer funds and clears trades. This is the same money test that decides margin collection: the firm that holds the money carries the heaviest capital duty.
- The independent IB must keep $45,000 in adjusted net capital. An independent IB that is also a registered securities broker-dealer meets the requirement through the applicable broker-dealer net-capital floor instead.
- The guaranteed IB has no separate net-capital minimum. The guarantee agreement shifts that responsibility to its single guarantor FCM.
Think of it this way: capital is a firm's own safety cushion for the risk it holds. The FCM holds everyone's money, so it needs the biggest cushion. The independent IB holds no customer money but still stands alone, so it keeps a modest cushion of its own. The guaranteed IB borrows its guarantor's cushion, so it needs none.
Exam Tip: Gotchas
- Match the firm to its figure: FCM $1,000,000, independent IB $45,000, guaranteed IB none. The most common trap swaps these or hands the guaranteed IB a capital minimum. The guaranteed IB's number is zero because the guarantor FCM is on the hook.
- Adjusted net capital must stay at or above the minimum at all times. A choice that lets a firm dip below the floor between reports, then top back up, is wrong. The requirement is continuous.