How much capital sits immobilised against regulatory margin rather than funding the business, and how thin the cushion runs at smaller firms.
ID B-29 ÷ B-24 · MFD B-18 ÷ B-17 · proposed DC B-31 ÷ B-26.
Sets minimum capital and Financial Institution Bond coverage.
Risk adjusted capital Statement B
Regulatory capital after deducting non-allowable assets, minimum capital and every margin requirement, then adding back applicable tax recoveries. Reported here as a multiple of total margin required rather than as a dollar figure.
Minimum capital Statement B Line 8
$75,000 for a Type 1 introducing broker and $250,000 for every other investment dealer. For mutual fund dealers it runs from $75,000 to $250,000 by dealer level and whether client free credit cash or margin lending is used. Capital ratios are not comparable across types without knowing which.
The formulas are not yet the same
Mutual fund dealer risk adjusted capital is working-capital based; the investment dealer formula is net-allowable-assets based. CIRO's proposed consolidated form adopts the investment dealer formula with a five-year phase-in, carried on new Statement B lines 3b and 19b.
Do not pool risk adjusted capital across dealer types until the consolidated formula is in force. The two are computed on different bases and a pooled median would be meaningless.
CIRO estimates roughly 13% of mutual fund dealers will see risk adjusted capital fall by at least 5% from the formula change alone, mostly Level 4 firms.