Rule 15c3-3: Customer Protection
Method: Instructor-led training
Time: 8:30 am - 5:00 pm
Instructor: Tom Santulli
Fee: Call for details (212) 851-8414 or email at
Download Course Agenda
The objective of the Securities and Exchange Commission Regulation 15c3-3 is to prevent all broker-dealers from utilizing customer assets for proprietary purposes. This financial training course is intended to provide an understanding of how this regulation impacts clearing and non-clearing firms financially and operationally and clarifies their respective responsibilities.
- Explore historical circumstances leading to the current financial and record keeping rules.
- Understand objectives of the rule and what it is expected to accomplish.
- Discuss limitations on a broker-dealers ability to handle customer cash and securities.
- Review the overlapping relationships of Rules 15c3-3 and 15c3-1.
- Examine customer security segregation requirements.
- Describe reserve requirements for customer funds.
- Identify operational penalties required by the rule.
- Explore the financial/operational/liquidity impact from the rule.
Who should attend:
- Supervisory, financial and operations staff, auditors, legal/compliance and risk management staff, sales professionals, and regulatory reporting training staff.
Rule 15c3-3: Customer Protection - Course Agenda
8:30am – 9:00am
Registration and Continental Breakfast
9:00am – 10:00am
Background History of the Rule
- Pre-1934 SEC regulation
- Securities and Exchange Acts of 1933 and1934
- Pre 1975 SEC/NYSE Limited Customer Asset Protection
- Broker-dealer failures deplete the NYSE Trust Fund
- Securities Investor Protection Act
- Abusive practices lead to the customer asset protection rule
10:00am – 10:15am
10:15am – 12:00pm
Objectives of Rule 15c3-3
- Prevent the use of customer assets for proprietary purposes
- Safeguarding of customer cash and securities
- Require firm and customer, cash and securities segregation
- Penalize operational inefficiencies
- Provide additional liquidity in the event of brokerage failures
- Customer, non-customer-broker/dealer, bank
- Principals, household member and affiliate(s) accounts
- Foreign accounts
- Special Reserve Bank Account
- Qualified securities
- Free credit balances
- Fully paid securities
- Margin and excess margin securities
- Bona fide debit balances
- Commodity futures accounts
- Types of broker-dealers
- Limitations on carrying customer accounts
Possession or Control of Securities (P&C)
- What constitutes an acceptable control location
- Requirement to promptly reduce securities to P&C
- Proprietary uses of customer(s) excess margin securities
- Borrowing/lending, repurchase, agreements
- Securities in transit
- Failures to reduce securities to P&C
12:00pm – 1:00pm
1:00pm – 3:00pm
The Reserve Computation
- Weekly and monthly required calculations
- Deposit requirements
- Bank requirements
- Total Debits vs. Aggregate Debits
- Components of the computation
- Reconciliation of Month end vs. weekly calculations
3:00pm – 3:15pm
3:15pm – 5:00pm
- GAAP accounting
- Recording securities locations
Security Allocation Systems
- Specific segregation
- Bulk segregation