The Risk-based Capital Adequacy Requirement would replace the minimum Net Capital requirement of Rs. 35 million, which is currently applicable to Stockbroker Firms.

The Net Capital is derived by deducting items which are not immediately realizable from shareholder funds of the Stockbroker Firm, as set out in the CSE Stockbroker Rules.

At present, the minimum Net Capital requirement is fixed for all Stockbroker Firms regardless of the risk undertaken by each firm. The current minimum Net Capital requirement does not provide sufficient weightage to different types of risks that a Stockbroker Firm would be exposed to, such as the risk exposure arising from trading activities and the operations of the Stockbroker Firm. Also, the Net Capital positions are presently reported by the Stockbrokers to CSE and SEC only on a monthly basis.