On Jan. 13, 2025, SEC published B/D customer protection final rule in federal register.
Carrying broker-dealers must begin calculating average total credits using the 12 most recently filed month-end FOCUS Reports ending with FOCUS report for Jun. 30, 2025.
B/Ds that exceed $500mn threshold to perform computations daily by Dec. 31, 2025.
Final rule is effective on Mar. 14, 2025; compliance dates allow for time to comply.
On Jul. 12, SEC proposed large B/Ds to compute net cash owed daily.
Rule 15c3-3 addresses manner in which carrying B/D holds proprietary securities, cash in accounts of customers and other B/Ds, Proprietary securities account of B/D (PAB).
Proposed enhancements to require certain B/Ds to increase frequency of computations of net cash owed customers, other B/Ds (PAB account holders) from weekly to daily.
Net cash owed to customer, PAB account holder held in special reserve bank account.
Aims to decrease likelihood of customer losses in the event of a broker-dealer failure.
Require carrying B/Ds with large total credits to increase frequency of their customer and PAB reserve computations from weekly to daily, as of close of prior business day.
Large total credits generally amount of cash owed to customers, PAB account holders.
Applicable to those carrying average total credits equal to or greater than $250mn.
Must make deposits by 1 hour after opening of business on following business day.
Those carrying broker-dealers would be required to make deposits no later than one hour after the opening of banking business on the following business day.
For example, carrying B/D performing computation on Tuesday as of close of business Monday must make deposit on Wednesday, assuming all three days are business days.
$250mn Threshold Applicability
Daily computation required by 6 months after exceeding the $250mn threshold.
Specified action when average total credits subsequently fall below $250mn threshold,
Would require the carrying B/D to continue performing daily computations.
Must provide written notification to designated examining authority of election to perform weekly computations, 60 days prior to reverting to weekly computations.
Average Total Credits Proposal
Defined average total credits as arithmetic mean of sum of total credits reported in a carrying B/D's customer, PAB reserve computations in 12 most recently filed reports.
12 most recently filed month-end Financial and operational reports (FOCUS Reports).
Therefore, as proposed, average total credits would be a 12-month rolling average.
Carrying B/D would add up sum of the total credits reported in the customer and PAB reserve computations in each of the 12 most recently filed month-end FOCUS Reports.
Then, divide that amount by 12 to calculate the arithmetic mean of the total credits.
Consultation
Comments must be submitted in 60 days from pending publication in federal register.
Jul. 2023 Fed Reg Proposal
On Jul. 18, 2023, SEC published proposal in federal register, comment Sep. 11, 2023.
Dec. 10, 2024 SEC Final Rule
On Dec. 20, 2024, SEC adopted rule amendments to the B/D customer protection rule.
The SEC also adopted amendments to the B/D net capital rule, 17 CFR 240.15c3-1.
To permit certain B/Ds that perform daily reserve computation for customer accounts to reduce aggregate debit items by 2% rather than 3% as part of computation
Effective 60 days after date of publication of adopting release in the federal register.
B/Ds that exceed $500mn threshold using each of 12 filed month-end FOCUS Reports from Jul. 31, 2024 - Jun. 30, 2025, must do customer, PAB reserve computations daily.
Daily beginning no later than Dec. 31, 2025 (i.e., six months after Jun. 30, 2025).
When the amendments are effective, a carrying B/D may voluntarily perform a daily customer reserve computation and apply 2% aggregate debit items reduction.
Provided it notifies designated examining authority in writing 30 calendar days prior.
Dec. 20, 2024 SEC Statements
On Dec. 20, 2024, SEC published Chair Gensler, Commissioner Pierce, Uyeda remarks.
Jan. 2025 SEC Fed Reg Final Rule
On Jan. 13, 2025, SEC published B/D customer protection final rule in federal register.
Carrying broker-dealers must begin calculating average total credits using the 12 most recently filed month-end FOCUS Reports ending with FOCUS report for Jun. 30, 2025.
B/Ds that exceed $500mn threshold to perform computations daily by Dec. 31, 2025.
Final rule is effective on Mar. 14, 2025; compliance dates allow for time to comply.
