Each Member subject to Rule 15c3-1 under the Exchange Act shall comply with the capital requirements
prescribed therein and with the additional requirements of this Options 6D. Market makers must also comply
with the minimum financial requirements contained in Options 2, Section 2.
[Adopted June 6, 2019 (SR-ISE-2019-17).]
Every Member subject to the reporting or notification requirements of Rule
17a-11 under the Exchange Act or the "early warning" reporting, business restriction or business reduction
requirements of another national securities exchange, registered securities association or registered
securities clearing organization shall promptly notify the Exchange in writing and shall thereafter file
with the Exchange such reports and financial statements as may be required by the Exchange.
[Adopted June 6, 2019 (SR-ISE-2019-17).]
Whenever it shall appear to the President of the Exchange that a Member obligated to give notice to the
Exchange under Options 6D, Section 2 is unable within a reasonable period to reduce the ratio of its
aggregate indebtedness to net capital, or to increase its net capital, to a point where it is no longer
subject to such notification obligations, or that such Member is engaging in any activity which casts doubt
upon its continued compliance with the net capital requirements, the President may impose such conditions
and restrictions upon the operations, business and expansion of such Member and may require the submission
of, and adherence to, such plan or program for the correction of such situation as he determines to be
necessary or appropriate for the protection of investors, other Members and the Exchange.
[Adopted June 6, 2019 (SR-ISE-2019-17).]
An arrangement may be established between two or more registered broker-dealers pursuant to Regulation T
Section 220.7 to form a joint back office ("JBO") arrangement for carrying and clearing or carry accounts of
participating broker-dealers. Members must provide written notification to their Designated Examining
Authority prior to establishing a JBO arrangement.
(a) A carrying and clearing, or carry member must:
(1) maintain a minimum tentative net capital of $25
million as computed pursuant to Rule 15c3-1 of the Exchange Act, except that a Member whose primary business
consists of the clearance of options Market Maker accounts, may carry JBO accounts provided that it
maintains a minimum net capital of $7 million as computed pursuant to Rule
15c3-1 of the Exchange Act. In addition, the Member must include in its ratio of gross options Market Maker
deductions to net capital required by the provisions of Rule 15c3-1 of the Exchange Act, gross deductions
for JBO participant accounts. Clearance of option Market Maker accounts shall be deemed a broker-dealer's
primary business if a minimum of 60% of the aggregate deductions in the above ratio are options Market Maker
deductions. In the event that a carrying and clearing, or carrying member's tentative net capital, or net
capital, respectively, has fallen below the above requirements, the Member shall (i) promptly notify the
Exchange in writing of such deficiency and (ii) take appropriate action to resolve such deficiency within
three consecutive business days, or not permit any new transactions to be entered into pursuant to the JBO
agreement;
(2) maintain a written risk analysis methodology for
assessing the amount of credit extended to participating broker-dealers which shall be made available to the
Exchange upon request; and
(3) deduct from net capital haircut requirements
pursuant to Rule
15c3-1 of the Exchange Act in excess of the equity maintained in the accounts of the participating
broker-dealers.
(b) A participating broker-dealer must:
(1) be a registered broker-dealer subject to the
SEC's net capital rule;
(2) maintain an ownership interest in the
carrying/clearing member pursuant to Regulation T of the Federal Reserve Board Section 220.7; and
(3) maintain a minimum liquidating equity of $1
million in the JBO arrangement exclusive of the ownership interest established in subparagraph (b)(2) above.
When the minimum liquidating equity decreases below the $1 million requirement, the participant must deposit
an amount sufficient to eliminate this deficiency within five (5) business days or be subject to the margin
account requirements prescribed for customers in Regulation T, and the margin requirements pursuant to
Exchange Options 6C, Section 3.
[Adopted June 6, 2019 (SR-ISE-2019-17).]