Adopted Dec. 6, 2019 (SR-NASDAQ-2019-098).
Adopted Dec. 6, 2019 (SR-NASDAQ-2019-098).
Adopted Dec. 6, 2019 (SR-NASDAQ-2019-098).
(a) Requirements for Joint Back Office Participants. Every Participant or associated person that maintains a joint back office ("JBO") arrangement with a clearing broker-dealer subject to the requirements of Regulation T Section
220.7 of the Federal Reserve System that is not an NYSE member and that has elected instead to be bound by CBOE margin requirements shall comply with the requirements prescribed below:
(1) Each JBO participant must be registered as a broker-dealer pursuant to Section 15 of the Securities Exchange Act of 1934 and subject to the capital requirements prescribed by Rule 15c3-1 therein; and shall not be eligible to operate
under the provisions of SEC Rule 15c3-1(b)(i).
(2) Each JBO participant must meet and maintain a minimum account equity requirement of $1,000,000 with each clearing broker-dealer where a JBO account is carried. If equity is below $1,000,000 the carrying organization must issue
a call for additional funds or securities which shall be obtained within five business days. If funds or securities sufficient to eliminate the deficiency are not received within 5 business days, the carrying organization must margin the account in accordance
with the requirements prescribed for a customer in Regulation T and Options 6C, Section 3 of these Rules.
(3) Each JBO participant must meet and maintain the ownership standards established by the clearing broker-dealer; and
(4) Each JBO participant must employ (or have access to) a qualified Series 27 principal.
(b) Requirements for Clearing Participants Carrying the Accounts of JBO Participants. Every Clearing Participant carrying JBO accounts in accordance with Regulation T, Section 220.7 of the Federal Reserve Board is subject to
the requirements outlined below:
(1) Each Participant which carries JBO accounts shall not allow its (a) tentative net capital to fall below $25 million; or in the alternative its (b) net capital to fall below $7 million for a period in excess of three (3) consecutive
business days, provided that the broker-dealer has as its primary business the clearance of options Market Maker accounts and provided that at least 60% of the sum of gross haircuts calculated for all options Market Maker and JBO participant accounts, without
regard to related account equity or clearing firm net capital charges, is attributable to options Market Maker transactions. In addition, the firm operating pursuant to (b) must include the gross deductions calculated for all JBO participant accounts in the
clearing firm's ratio of gross options Market Maker deductions to adjusted net capital in accordance with the provisions of SEC Rule 15c3-1.
(2) Each Participant which maintains JBO accounts shall require and maintain equity of $1,000,000 for each participant, over all related accounts. If equity is below $1,000,000 the carrying organization must issue a call for additional
funds or securities which shall be obtained within five business days. If funds or securities sufficient to eliminate the deficiency are not received within 5 business days, the carrying organization must margin the account in accordance with the requirements
prescribed for a customer in Regulation T and Options 6C, Section 3 of these Rules.
(3) Each Participant which maintains JBO accounts shall adjust its net worth daily by deducting any deficiency between a JBO Participant's account equity and the proprietary haircut calculated pursuant to SEC Rule 15c3- 1 for the
positions maintained in such account.
(4) Each Participant which maintains JBO accounts shall establish and maintain written ownership standards for JBO accounts.
(5) The Participant must develop risk analysis standards which are acceptable to the Nasdaq Regulation. At minimum these standards must comply with the requirements of Options 6E, Section 6 of these Rules.
(6) Each Participant which maintains JBO accounts must notify its Designated Examining Authority ("DEA"), in writing, of its intention to carry such accounts.
(7) If at any time a Clearing Participant operating pursuant to paragraphs i(a) or (b) above determines that its tentative net capital or that its net capital, respectively, has fallen below the applicable requirements, such clearing
member shall immediately notify Nasdaq Regulation of such deficiency by telegraphic or facsimile notice; and be subject to the prohibitions against withdrawal of equity capital set forth in SEC Rule 15c3-1(e) and to the prohibitions against reduction, prepayment,
and repayment of subordination agreements set forth in paragraph (b)(1) of SEC Rule 15c3-1d, as if such broker or dealer's net capital were below the minimum standards specified by each of these paragraphs.
(c) JBO participants shall not be considered self-clearing for any purpose other than the extension of credit under Options 6C of these Rules.
Adopted Dec. 6, 2019 (SR-NASDAQ-2019-098).