SEC Notice on Broker-Dealer Reserve Computations for U.S. Treasury Securities
AI-generated summary for informational purposes only. Not legal advice. See the original source for the authoritative text.
The law allows broker-dealers to revise how they compute cash reserves when dealing with U.S. Treasury securities. Broker-dealers can now consider certain deposits, like cash or Treasury securities, in reserve calculations for customer margin requirements. This adjustment is to better align with existing market clearing practices and may require operational updates by compliance teams.
AI-generated summary. May contain errors. Refer to official sources for legal decisions.
Key Changes
- Broker-dealers can now include cash or Treasury securities in reserve calculations.
- Conditions set in Note H must be met for calculating reserves.
- CMESC rules have been approved for compliance with the regulation.
Obligations
What this law requires
Broker-dealers must meet all conditions set forth in Note H to Item 15 of Rule 15c3-3a before including a debit in customer and/or PAB reserve computations for U.S. Treasury securities clearing agency margin deposits.
Broker-dealers must deposit cash, U.S. Treasury securities, and/or qualified customer securities with CME Securities Clearing Inc. (CMESC) to meet margin requirements resulting from customer positions in U.S. Treasury securities in order to claim the reserve debit.
Broker-dealers must ensure that margin deposited with CMESC is properly maintained and accounted for in accordance with Note H conditions regarding custody and segregation of customer and PAB account holder margin.
Broker-dealers must compute customer and PAB reserve requirements in accordance with Rule 15c3-3a, including the addition of Item 15 reflecting the debit value for eligible U.S. Treasury securities clearing deposits.
Broker-dealers must perform customer and PAB reserve computations on a weekly or daily basis and make required deposits in a special reserve account at a bank, as required by Rule 15c3-3(e)(3).