TD Ameritrade 2018 Annual Report

44 The following tables summarize our broker-dealer and FCM/FDM subsidiaries' net capital and adjusted net capital, respectively, as of September 30, 2018 (dollars in millions): Net Capital Early Warning Threshold Net Capital in Excess of Early Warning Threshold TD Ameritrade Clearing, Inc. . . . . . . . . . . . . . . . . . . $ 2,831 $ 1,312 $ 1,519 TD Ameritrade, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 181 $ 0.3 $ 181 Adjusted Net Capital Early Warning Threshold Adjusted Net Capital in Excess of Early Warning Threshold TD Ameritrade Futures & Forex LLC . . . . . . . . . . . . $ 129 $ 25 $ 104 Our clearing broker-dealer subsidiary, TD Ameritrade Clearing, Inc. ("TDAC"), engages in activities such as settling client securities transactions with clearinghouses, extending credit to clients through margin lending, securities lending and borrowing transactions and processing client cash sweep transactions to and from bank deposit accounts and money market mutual funds. These types of broker-dealer activities require active daily liquidity management. Most of TDAC's assets are readily convertible to cash, consisting primarily of cash and investments segregated for the exclusive benefit of clients, receivables from clients and receivables from brokers, dealers and clearing organizations. Cash and investments segregated for the exclusive benefit of clients may be held in cash, reverse repurchase agreements (collateralized by U.S. government debt securities), U.S. Treasury securities, U.S. government agency mortgage-backed securities and other qualified securities. Receivables from clients consist of margin loans, which are demand loan obligations secured by readilymarketable securities. Receivables frombrokers, dealers and clearing organizations primarily arise from current open transactions, which usually settle or can be settled within a few business days. TDAC is subject to cash deposit and collateral requirements with clearinghouses such as the Depository Trust & Clearing Corporation ("DTCC") and the Options Clearing Corporation ("OCC"), which may fluctuate significantly from time to time based on the nature and size of our clients' trading activity. The following table sets forth TDAC's cash and investments deposited with clearing organizations for the clearing of client equity and option trades (dollars in millions): September 30, 2018 2017 TD Ameritrade Clearing, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 585 $ 476 Liquidity needs for TDAC relating to client trading and margin borrowing are met primarily through cash balances in client brokerage accounts and through lending and pledging of client margin securities. Cash balances in client brokerage accounts not used for client trading and margin borrowing activity are not generally available for other liquidity purposes and must be segregated for the exclusive benefit of clients under Rule 15c3-3 of the Exchange Act. Cash balances in client brokerage accounts are summarized in the following table (dollars in billions): September 30, 2018 2017 TD Ameritrade Clearing, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22.5 $ 18.5