The first is net capital. According to Article 9 of the Measures, net capital is a comprehensive risk control index obtained by risk adjustment of assets and liabilities and related businesses on the basis of net assets according to the business scope of securities companies and the liquidity characteristics of assets and liabilities of companies. Simply put, the net capital index is the part of the securities company's net assets that is highly liquid and can be quickly realized. The "Measures" stipulate the absolute and relative indicators of the net capital of securities companies, with the aim of matching the company's business scope with its net capital adequacy level. (articles 19, 20, 22 and 23).
The monitoring of net capital is reflected in the two tables at hand, namely, the Calculation Table of Net Capital of Securities Companies and the Supervision Report on Risk Control Indicators of Securities Companies.
The second is the preparation of venture capital. Definition of risk capital reserve in the Measures: If a securities company carries out various businesses and establishes branches that may lead to the risk of net capital loss, it shall calculate the risk capital reserve according to certain standards and establish a corresponding relationship with net capital to ensure that all risk capital reserves are supported by corresponding net capital. In other words, through the preparation of venture capital, the mechanism of dynamically linking the scale of various businesses with the level of net capital has been established.