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Capital Adequacy
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Capital adequacy represents the test of a securities business's ability to meet its financial obligations. Capital adequacy rules mean that a stockbroker has to have enough money to conduct its business:
- to support the risks of trading;
- the possibility of reduced revenue from weak trading conditions;
- the danger that book debts may not be fully realised.
Commercial banks also face a raft of capital adequacy rules established by international regulators.
See Also: Online share dealing service Stockmarket Centre
Last Updated: May 2007 © Moneyextra.com
MoneyExtra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.