4384. Calculating usable free credit balances

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    1. A Dealer Member must not use in its business an amount of clients’ free credit balances that totals more than the greater of:

      1. general free credit limit:

        twelve times the Dealer Member’s early warning reserve amount, or

      2. margin lending adjusted free credit limit:

        twenty times the Dealer Member’s early warning reserve amount for margin lending purposes plus twelve times the remaining early warning reserve amount for all other purposes, where the remaining early warning reserve amount equals the early warning reserve amount minus 1/20th of the total settlement date client margin debit amount.

    2. A Dealer Member must segregate clients’ free credit balances in excess of the amount calculated in subsection 4384(1) either:

      1. in cash held in trust for clients in a separate account with an acceptable institution, and this trust property must be clearly identified as such at the acceptable institution, or

      2. in the following securities:
         

        Securities eligible for client free credit segregation purposes

        Category

        Minimum designated rating organization current credit rating Qualification(s)

        1.

        Bonds, debentures, treasury bills and other securities with a term of 1 year or less, issued or guaranteed by the following:‌

        • ‌national governments of Canada, United Kingdom, and United States‌

        • Canadian provincial governments

        Not applicable (N/A)

        Not applicable (N/A)

        2.

        Bonds, debentures, treasury bills and other securities with a term of 1 year or less, issued or guaranteed by any other national foreign government not identified in category 1

        AAA

        Foreign government must be a member of the Basel Accord

        3.

        Canadian bank paper with an original maturity of 1 year or less

        R-1(low), F1, P-1, A‑1(low)

        No designated rating organization has a lower current credit rating

        Must be issued by a Canadian chartered bank

        Securities issued by a provider of capital, as defined in Form 1, Schedule 14, are not eligible

         


     

    Notice 21-0028 - Amendments to Dealer Member Rules [IIROC Rules] and Form 1 regarding the securities concentration test and designated rating organizations

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