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This is definitely something you want to know as it appears on many real series exams. Broker dealers who meet the $25,000 Capital requirement are allowed to conduct mutual fund business on a wire basis. This allows the firm to accept customer funds and transmit them to the investment company for the purchase of mutual fund shares. Conducting mutual fund business in this way is far superior to the old subscription based model. Customers who purchase mutual fund shares on a subscription basis must fill out a subscription form and forward it to the mutual fund company with a check
Broker dealers who exclusively conduct mutual fund business on a subscription basis are subject to a minimum net capital of $5,000. These types of firms are known as “nickel BDs” Here is the important test point for your exam. Broker dealers who are subject to the $25,000 requirement are allowed to accept a customer’s stock certificate ( ie IBM, Amazon, Apple) and sell the shares for the customer, so long as the proceeds are immediately transmitted to the mutual fund to purchase shares.