SEC Proposes Rule Amendments to the Broker-Dealer Customer Protection Rule
The SEC proposed amendments to Rule 15c3-3 to require certain broker-dealers to perform daily computations of net cash owed to customers and other broker-dealers, rather than weekly, to enhance customer protection.
The proposed amendments target broker-dealers with average total credits of $250 million or more, requiring them to perform daily computations of net cash owed to customers and other broker-dealers. The goal is to enhance customer protection by ensuring that reserve bank accounts more accurately and promptly reflect cash obligations. The proposal does not impose new financial penalties or charges but mandates operational changes to improve liquidity matching and safeguard customer assets.
The Securities and Exchange Commission (SEC) proposed amendments to Rule 15c3-3, also known as the Customer Protection Rule, to require certain broker-dealers to perform daily computations of net cash owed to customers and other broker-dealers, rather than weekly. This change aims to enhance customer protection by ensuring that reserve bank accounts more accurately and promptly reflect cash obligations, reducing the risk of large mismatches that could leave customers underprotected in the event of broker-dealer failure. The proposal targets broker-dealers with average total credits of $250 million or more. SEC Chair Gary Gensler emphasized that daily calculations better align with the speed and volume of modern markets, reinforcing the longstanding principle of segregating customer funds. The proposal does not involve fraud or enforcement actions but is a preventive regulatory update to strengthen financial safeguards. By reducing the timeframe between computations, the proposal would assist broker-dealers in more dynamically matching the net amount of cash owed to customers and PAB account holders with the amount on deposit in the broker-dealer's customer and PAB reserve bank accounts. A 60-day public comment period will follow publication in the Federal Register.
Exhibits & Attached Documents (2)
Extracted insights
- $250.00M $250 million $100M–$1B
- person gary gensler
- agency Securities and Exchange Commission
- person this proposal
- Securities And Exchange Commission proposed amendments to Rule 15c3-3 (the Customer Protection Rule)
- Gary Gensler said he is pleased to support this proposal
- Proposal would require broker-dealers with average total credits equal to or greater than $250 million to make the computations necessary to determine the amounts required to be deposited daily
- Daily Customer And PAB Reserve Computations would safeguard customers and PAB account holders
- Public Comment Period will remain open for 60 days following publication of the proposing release on the SEC website or 30 days following publication in the Federal Register
The Securities and Exchange Commission today proposed amendments to Rule 15c3-3 (the Customer Protection Rule) to require certain broker-dealers to increase the frequency with which they perform computations of the net cash they owe to customers and other broker-dealers (known as PAB account holders) from weekly to daily. Net cash owed to customers and PAB account holders must be held in a special reserve bank account. “I am pleased to support this proposal because, if adopted, it would help protect customers in the event that a broker-dealer fails,” said SEC Chair Gary Gensler. “A key tenet of our securities laws is the segregation of customers’ cash and securities from a broker-dealer’s own account. Given the speed, scale, and volume of today’s market activity, I believe customers would benefit if broker-dealers carrying large credit balances made daily reserve account calculations and deposits. This frequency would better align with the inflows, swings, and balances that broker-dealers experience in today’s markets.” Broker-dealers occasionally may have substantial deposit requirements as a result of customer and PAB reserve computations. The proposal would require broker-dealers with average total credits (the amount of cash they owe customers and PAB account holders) equal to or greater than $250 million to make the computations necessary to determine the amounts required to be deposited in the customer and PAB reserve bank accounts daily, as of the close of the previous business day. By reducing the timeframe between computations, the proposal would assist broker-dealers in more dynamically matching the net amount of cash owed to customers and PAB account holders with the amount on deposit in the broker-dealer’s customer and PAB reserve bank accounts. The daily customer and PAB reserve computations would safeguard customers and PAB account holders by lessening the potential for large mismatches to build over time, thereby increasing the likelihood that they are made whole even if a broker-dealer fails. The proposing release will be published in the Federal Register. The public comment period will remain open for 60 days following publication of the proposing release on the SEC website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.
The Securities and Exchange Commission today proposed amendments to Rule 15c3-3 (the Customer Protection Rule) to require certain broker-dealers to increase the frequency with which they perform computations of the net cash they owe to customers and other broker-dealers (known as PAB account holders) from weekly to daily. Net cash owed to customers and PAB account holders must be held in a special reserve bank account. “I am pleased to support this proposal because, if adopted, it would help protect customers in the event that a broker-dealer fails,” said SEC Chair Gary Gensler. “A key tenet of our securities laws is the segregation of customers’ cash and securities from a broker-dealer’s own account. Given the speed, scale, and volume of today’s market activity, I believe customers would benefit if broker-dealers carrying large credit balances made daily reserve account calculations and deposits. This frequency would better align with the inflows, swings, and balances that broker-dealers experience in today’s markets.” Broker-dealers occasionally may have substantial deposit requirements as a result of customer and PAB reserve computations. The proposal would require broker-dealers with average total credits (the amount of cash they owe customers and PAB account holders) equal to or greater than $250 million to make the computations necessary to determine the amounts required to be deposited in the customer and PAB reserve bank accounts daily, as of the close of the previous business day. By reducing the timeframe between computations, the proposal would assist broker-dealers in more dynamically matching the net amount of cash owed to customers and PAB account holders with the amount on deposit in the broker-dealer’s customer and PAB reserve bank accounts. The daily customer and PAB reserve computations would safeguard customers and PAB account holders by lessening the potential for large mismatches to build over time, thereby increasing the likelihood that they are made whole even if a broker-dealer fails. The proposing release will be published in the Federal Register. The public comment period will remain open for 60 days following publication of the proposing release on the SEC website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.