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Under Rule 15c3-3, most carrying firms must compute the reserve formula weekly (as of the last business day of the week). If a deficiency exists, funds must be deposited in the Special Reserve Bank Account by the next business day. This ensures customers’ funds remain protected. Thus, B is correct.

SEC Rule 17a-5 establishes the reporting requirements for broker-dealers, including the submission of annual audited financial statements. These filings must be prepared in accordance with GAAP and audited by a PCAOB-registered firm. Rule 17a-3 covers record creation, Rule 17a-4 governs record retention, and Rule 15c3-3 covers customer protection. Thus, C is correct.

The Public Company Accounting Oversight Board (PCAOB) inspects firms that audit broker-dealers, ensuring compliance with professional auditing standards. The SEC enforces securities laws, FINRA regulates broker-dealers, and FASB sets GAAP standards. Thus, B is correct.

“Haircuts” are regulatory discounts applied to the market value of securities when calculating net capital. They account for market risk and potential volatility, ensuring the firm does not overstate its ability to liquidate assets. For example, equities may have a 15% haircut, while U.S. Treasuries have lower percentages. This conservative adjustment protects the financial system. Thus, B is correct.

The Federal Funds market is where banks and broker-dealers lend to each other overnight, unsecured, to meet reserve or liquidity needs. These are very short-term loans. Repos are collateralized, commercial paper is unsecured but longer term, and Treasuries are investment securities. Thus, B is correct.