On July 12, 2023, the SEC proposed amendments to Exchange Act Rule 15c3-3 (the Customer Protection Rule) to require certain broker-dealers to perform their reserve formula computations and make required deposits into their reserve accounts daily, rather than weekly.

The Customer-Protection Rule currently requires broker-dealers that hold customer funds or owe customers money to determine, at least weekly, what net obligations it has for all customers. If total customer credits are greater than total customer debits, the broker-dealer has a reserve requirement and must deposit into a special reserve account an amount to ensure the broker-dealer can satisfy all customer claims.

The SEC is now proposing to amend the Customer Protection Rule to require broker-dealers with average total credits that are equal or greater than $250 million to make the required reserve formula computation daily. Any required deposits would have to be made no later than one hour after the opening of banking business the following business day. The daily reserve formula computation requirement would also apply to propriety securities accounts of other broker-dealers (PAB accounts).

While the SEC did not propose to apply the daily reserve formula computation requirements to broker-dealers and security-based swap dealers (SBSDs) with respect to their security-based swap (SBS) customers, the SEC is requesting comment on whether it should do so.

For more information on the Customer Protection Rule, see Practice Note, The Customer Protection Rule for Broker-Dealers.