SEC no-action letter relating to prime brokerage: Difference between revisions

*The customer must keep a [[minimum net equity]] with the prime broker of at least $500,000 in cash or liquid securities (those with “a ready market”)<ref>See the definition  in 15-c3 of [https://www.law.cornell.edu/cfr/text/17/240.15c3-1. ready market], which amounts to a liquid public market: “... a recognized established securities market in which there exists independent bona fide offers to buy and sell so that a price reasonably related to the last sales price or current bona fide competitive bid and offer quotations can be determined for a particular security almost instantaneously ...”.</ref> and the customer is obliged to cure any [[passive breach]]es of that USD500,000 limit within a rather leisurely 5 business days, on pain of the [[PB]] publicly disowning its customer and [[DK]]ing<ref>Until the year of our Lord 2021, the [[JC]] laboured under the gentle misapprehension that “DK” stood for “drop-kick”. To an American, not being wise in the ways of rugby union, it turns out [[DK]] means she “does not know” — that is, rejects — the trade allegation. Strange but true.</ref> all subsequent trades.