Rule2025-12016
Extension of Compliance Date for Required Daily Computation of Customer and Broker-Dealer Reserve Requirements Under the Broker-Dealer Customer Protection Rule
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 1, 2025
Issuing agencies
Securities and Exchange Commission
Abstract
The Securities and Exchange Commission ("Commission") is extending the compliance date for the recently adopted amendments that require certain broker-dealers to perform daily reserve computations and make required deposits into their reserve bank accounts daily rather than weekly by six months from December 31, 2025, to June 30, 2026.
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<title>Federal Register, Volume 90 Issue 124 (Tuesday, July 1, 2025)</title>
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[Federal Register Volume 90, Number 124 (Tuesday, July 1, 2025)]
[Rules and Regulations]
[Pages 27990-27992]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-12016]
[[Page 27990]]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-103320; File No. S7-11-23]
RIN 3235-AN28
Extension of Compliance Date for Required Daily Computation of
Customer and Broker-Dealer Reserve Requirements Under the Broker-Dealer
Customer Protection Rule
AGENCY: Securities and Exchange Commission.
ACTION: Final rule; extension of compliance date.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
extending the compliance date for the recently adopted amendments that
require certain broker-dealers to perform daily reserve computations
and make required deposits into their reserve bank accounts daily
rather than weekly by six months from December 31, 2025, to June 30,
2026.
DATES: As of July 1, 2025, the compliance date for Rule 15c3-
3(e)(3)(i)(B)(1), published January 13, 2025, at 90 FR 2837, is
extended from December 31, 2025, to June 30, 2026.
FOR FURTHER INFORMATION CONTACT: Michael A. Macchiaroli, Associate
Director; Raymond Lombardo, Assistant Director; Sheila Dombal Swartz,
Senior Special Counsel; or Abraham Jacob, Special Counsel, Office of
Broker-Dealer Finances, at (202) 551-5500, Division of Trading and
Markets, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-7010.
SUPPLEMENTARY INFORMATION: The Commission is extending the compliance
date for the requirement to perform a reserve computation for accounts
of customers (``customer reserve computation'') and accounts of other
broker-dealers (``PAB reserve computation'') daily rather than weekly
under paragraph (e)(3)(i)(B)(1) of Rule 15c3-3 under the Securities
Exchange Act of 1934 (``Exchange Act'') from December 31, 2025, to June
30, 2026.\1\ This daily reserve computation requirement applies to
broker-dealers with average total credits equal to or greater than $500
million (``$500 Million Threshold''). The Commission is not extending
the compliance dates with respect to the amendments to paragraph
(e)(3)(v) of Rule 15c3-3 and the conforming amendments to the Financial
and Operational Combined Uniform Single Report (``FOCUS Report'').
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\1\ 17 CFR 240.15c3-3(e)(3)(i)(B)(1) (``Rule 15c3-
3(e)(3)(i)(B)(1)'').
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I. Discussion
On December 20, 2024, the Commission adopted amendments to Rule
15c3-3 (the ``broker-dealer customer protection rule'') to require
broker-dealers that hold customer cash and securities (``carrying
broker-dealers'') and that exceed the $500 Million Threshold to perform
their customer and PAB reserve computations and make any required
deposits into their reserve bank accounts daily rather than weekly.\2\
The daily reserve computation requirement is designed to address the
risks associated with situations where a carrying broker-dealer
receives large cash inflows on behalf of customers and PAB account
holders during the week and days prior to the next required weekly
reserve computations and associated deposits into the reserve bank
accounts. Such occurrences can lead to circumstances where the net
amount of cash owed to customers and PAB account holders \3\ is
substantially greater than the amounts held in the carrying broker-
dealer's customer and PAB reserve bank accounts.\4\ By requiring daily
rather than weekly reserve computations and deposits, the protections
provided by the reserve requirements of Rule 15c3-3 will be applied
more quickly to newly deposited cash of customers and PAB account
holders and reduce the risk that if a carrying broker-dealer fails
financially, it may be unable to promptly return cash and securities to
customers and PAB account holders through an orderly self-
liquidation.\5\
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\2\ See Daily Computation of Customer and Broker-Dealer Reserve
Requirements Under the Broker-Dealer Customer Protection Rule,
Exchange Act Release No. 102022 (Dec. 20, 2024) [90 FR 2790 (Jan.
13, 2025)] (``Adopting Release''). The term ``average total
credits'' is defined as the arithmetic mean of the sum of total
credits in the customer reserve computation and the PAB reserve
computation reported in the carrying broker-dealer's 12 most
recently filed month-end FOCUS Reports. See Adopting Release, 90 FR
at 2793 and paragraph (e)(3)(i)(B)(1) of Rule 15c3-3.
\3\ The term PAB account means a proprietary securities account
of a broker-dealer (which includes a foreign broker-dealer, or a
foreign bank acting as a broker-dealer) other than a delivery-
versus-payment account or a receipt-versus-payment account. The term
does not include an account that has been subordinated to the claims
of creditors of the carrying broker-dealer. See paragraph (a)(16) of
Rule 15c3-3 and Adopting Release, 90 FR at 2791, n.9.
\4\ See Adopting Release, 90 FR at 2791-92.
\5\ See id. at 2792.
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In the Adopting Release, the Commission also amended Rule 15c3-
1,\6\ the broker-dealer net capital rule, to permit carrying broker-
dealers that use the alternative method to compute their minimum net
capital \7\ and that perform a required daily customer reserve
computation to reduce their aggregate debit items by 2% rather than 3%
(``2% debit reduction'') when performing a customer reserve computation
under Rule 15c3-3.\8\ Further, carrying broker-dealers that use the
alternative method and are below the $500 Million Threshold may
voluntarily perform a daily customer reserve computation under Rule
15c3-3 and, in so doing, apply the 2% debit reduction in lieu of the 3%
debit reduction if they notify their designated examining authority
(``DEA'') at least 30 days prior to beginning the daily customer
reserve computation.\9\ Finally, the Commission adopted technical
amendments to the FOCUS Report to conform it to the amendments with
respect to the lowering of the debit reduction from 3% to 2%.\10\
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\6\ 17 CFR 240.15c3-1 (``Rule 15c3-1'').
\7\ The minimum net capital requirement for broker-dealers is
the greater of a fixed-dollar amount specified in Rule 15c3-1 and an
amount determined by applying one of two financial ratios: the 15-
to-1 aggregate indebtedness to net capital ratio (``basic method'')
or the 2% of aggregate debit items ratio (``alternative method''). A
carrying broker-dealer using the alternative method must reduce
aggregate debit items (i.e., customer-related receivables) by 3%
when performing its customer reserve computation under Rule 15c3-3.
See Adopting Release, 90 FR at 2793.
\8\ See id. at 2793; see also paragraph (a)(1)(ii)(A) of Rule
15c3-1.
\9\ See paragraph (e)(3)(v) of paragraph 15c3-3.
\10\ See Adopting Release, 90 FR at 2806.
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The Commission addressed the compliance dates of the amendments in
the Adopting Release.\11\ The Commission stated that carrying broker-
dealers that exceed the $500 Million Threshold using each of the 12
filed month-end FOCUS Reports from July 31, 2024, through June 30,
2025, must perform customer and PAB reserve computations daily
beginning no later than December 31, 2025 (i.e., six months after June
30, 2025).\12\ The Commission also stated that on or after the
effective date of the final amendments,\13\ a carrying broker-dealer
may voluntarily perform a daily customer reserve computation and apply
the 2% debit reduction, provided it notifies its DEA in writing at
least 30 calendar days prior to beginning the daily customer reserve
computation that applies the 2% debit reduction.\14\ Finally, the
Commission stated in the Adopting Release that the compliance date for
the amendments to
[[Page 27991]]
the Form X-17A-5, Part II (i.e., Part II of the FOCUS Report) is March
1, 2026.\15\
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\11\ See Adopting Release, 90 FR at 2811-12.
\12\ See id.
\13\ The effective date of the amendments was March 14, 2025.
See Adopting Release, 90 FR at 2790.
\14\ See Adopting Release, 90 FR at 2811-12.
\15\ See id. The Commission is not extending the compliance
dates with respect to the amendment to paragraph (e)(3)(v) of Rule
15c3-3 that permits a carrying broker-dealer that does not exceed
the $500 Million Threshold but that elects to voluntarily perform a
daily customer reserve computation to apply the 2% debit reduction,
and the conforming amendments to Part II of the FOCUS Report.
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Since the Commission adopted the daily customer and PAB reserve
computation requirement, industry representatives and carrying broker-
dealers have indicated through telephonic meetings with Commission
staff and letters that, as carrying broker-dealers work to meet the
December 31, 2025, compliance date, some of them believe that
additional time to implement the capability to perform a required daily
customer and PAB reserve computation is needed. For example, the
Securities Industry and Financial Markets Association (``SIFMA''), on
behalf of its broker-dealer members, submitted a letter requesting that
the Commission extend the compliance date for the required daily
customer and PAB reserve computations established in the Adopting
Release by six months from December 31, 2025, to June 30, 2026.\16\ In
its letter, SIFMA stated that a six-month extension is necessary due to
the complexities of scoping out and developing the appropriate policies
and procedures, and systems, necessary to successfully automate and
implement a daily reserve computation. Regarding the transition to a
daily reserve computation requirement, SIFMA also stated that there is
no ``one size fits all'' approach applicable to all carrying broker-
dealers, but that it is governed by the individual circumstances of
each carrying broker-dealer. SIFMA stated that these complexities, and
the need to increase staffing levels to perform a daily customer and
PAB reserve computation, demonstrate that a six-month extension would
be appropriate and warranted.\17\
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\16\ See Letter from Kevin Zambrowicz, Deputy General Counsel
(Institutional) & Managing Director, SIFMA (Feb. 27, 2025) (``SIFMA
Letter'') at 2, available at <a href="https://www.sec.gov/comments/s7-11-23/s71123-580435-1668442.pdf">https://www.sec.gov/comments/s7-11-23/s71123-580435-1668442.pdf</a>.
\17\ See id. Another industry representative, the American
Securities Association, stated that the Commission should stay the
implementation of (and reconsider the need for) the daily customer
and PAB reserve computations, and re-open a public comment period to
allow for a more thorough assessment and broader industry
consultation. See Letter from Christopher A. Iacovella, President
and CEO, American Securities Association (Jan. 23, 2025) (``ASA
Letter'') at 2, available at <a href="https://www.sec.gov/comments/s7-11-23/s71123-580455-1668442.pdf">https://www.sec.gov/comments/s7-11-23/s71123-580455-1668442.pdf</a>. While the Commission understands the
perspective of the industry representative, the Commission adopted
these amendments following a robust comment period that included
broad industry consultation. A variety of persons, including broker-
dealers, retail investors, industry associations, and other market
participants participated in the rule-making process. As described
in the Adopting Release, the amendments provide benefits to the
financial system, to investor protection, and to broker-dealers.
Consequently, the Commission is not reconsidering or staying the
amendments.
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After considering such requests, the Commission is extending the
compliance date for the required daily customer and PAB reserve
computations. The Commission agrees with SIFMA that a six-month
extension will allow for additional time for carrying broker-dealers
that exceed the $500 Million Threshold to develop the policies and
procedures to perform a daily customer and PAB reserve computation, and
to increase staffing levels as needed. A six-month extension also will
facilitate an orderly transition to the new daily customer and PAB
reserve computation requirement by providing carrying broker-dealers
with additional time to make any necessary operational or systems
changes, and to streamline daily computation processes through
increased automation. In addition, a six-month extension will provide
more time for carrying broker-dealers to test their new daily
processes, procedures, and systems for compliance, including by
performing various test reserve computations, prior to beginning to
perform daily customer and PAB reserve computations under paragraph
(e)(3) of Rule 15c3-3.
For these reasons, the Commission is extending the compliance date
for carrying broker-dealers subject to the requirement to begin
performing daily customer and PAB reserve computations under paragraph
(e)(3)(i)(B)(1) of Rule 15c3-3 by six months from December 31, 2025, to
June 30, 2026. Under the compliance date extension, carrying broker-
dealers must begin calculating their average total credits using the 12
most recently filed month-end FOCUS Reports ending with the FOCUS
Report for December 31, 2025. As a result, carrying broker-dealers that
exceed the $500 Million Threshold using each of the 12 filed month-end
FOCUS Reports from January 31, 2025, through December 31, 2025, (and in
doing so become subject to the daily computation requirements) must
perform customer and PAB computations daily beginning no later than
June 30, 2026.\18\
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\18\ This date also aligns with the requirements of the final
amendments, as carrying broker-dealers are provided six months under
paragraph (e)(3)(i)(B)(1) of Rule 15c3-3 to begin performing
customer and PAB reserve computations daily after exceeding the $500
Million Threshold.
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Extending the compliance date also will provide carrying broker-
dealers whose average total credits may hover close to the $500 Million
Threshold additional time between the date the Commission adopted the
amendments in December 2024 and the December 31, 2025, calculation date
for average total credits to determine if they will be subject to the
requirement to perform a customer and PAB reserve computation daily
beginning no later than June 30, 2026, or whether they will manage
their customer and PAB credits to remain below the $500 Million
Threshold.
Lastly, the extension of the compliance date in this release does
not alter the ability of carrying broker-dealers that use the
alternative method for net capital to voluntarily elect to perform a
daily customer reserve computation and, in so doing, apply the 2% debit
reduction rather than the 3% debit reduction if they notify their DEA
at least 30 days prior to beginning the daily computation.\19\ Finally,
the Commission is not altering the March 1, 2026, compliance date with
respect to the amendments to Part II of Form X-17A-5.\20\
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\19\ See paragraph (e)(3)(v) of Rule 15c3-3 and Adopting
Release, 90 FR at 2812.
\20\ See Adopting Release, 90 FR at 2812.
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II. Economic Analysis
The Commission is mindful of the economic effects, including the
costs and benefits, of the compliance date extension. Exchange Act
section 3(f) requires the Commission, when it is engaged in rulemaking
pursuant to the Exchange Act and is required to consider or determine
whether an action is necessary or appropriate in the public interest,
to consider, in addition to the protection of investors, whether the
action will promote efficiency, competition, and capital formation.\21\
In addition, Exchange Act section 23(a)(2) requires the Commission,
when making rules pursuant to the Exchange Act, to consider among other
matters the impact that any such rule would have on competition and not
to adopt any rule that would impose a burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.\22\
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\21\ See 15 U.S.C. 78c(f).
\22\ See 15 U.S.C. 78w(a)(2).
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The baseline against which the costs, benefits, and the effects on
efficiency, competition, and capital formation of the compliance date
extension are measured consists of current requirements for carrying
broker-dealers under the broker-dealer customer protection rule and the
current market
[[Page 27992]]
structure and regulatory framework. As discussed above,\23\ the
compliance date for the required daily customer and PAB reserve
computations is December 31, 2025. However, industry representatives
and carrying broker-dealers have indicated through telephonic meetings
with Commission staff and letters, that an extension of the compliance
date to implement the capability to perform a required daily customer
and PAB reserve computation is needed.\24\
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\23\ See supra section I.
\24\ See SIFMA Letter at 2.
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The Commission is extending the compliance date for the required
daily customer and PAB reserve computations to June 30, 2026. Extending
the compliance date by six months will delay the start-up compliance
costs of carrying broker-dealers above the $500 Million Threshold and
hence provide them with additional time for developing the appropriate
policies and procedures, and systems, necessary to successfully
automate and implement the daily customer and PAB reserve computation
requirement.\25\ This extension will also provide carrying broker-
dealers additional time to fulfill their staffing needs and train their
personnel to facilitate the shift to the daily computation requirement.
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\25\ Extending the compliance date will also mitigate the
potential costs associated with overlap of the compliance date of
the daily customer and PAB reserve computation requirement and rules
that were adopted prior to the broker-dealer customer protection
rule. See Adopting Release at section IV.C.3. As explained in the
Adopting Release, where overlap in compliance periods exists, the
Commission acknowledges that there may be additional costs on those
entities subject to one or more other rules, but spreading the
compliance dates out over an extended period limits the number of
implementation activities occurring simultaneously. Id.
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The extension of the compliance date from December 31, 2025, to
June 30, 2026, will also delay the realization of economic benefits
associated with the final rule. In particular, the delayed benefits
include the reduced risk of a potential delay in the return of cash and
securities to customers and PAB account holders in the event of a
failure of an affected carrying broker-dealer.\26\
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\26\ See Adopting Release, 90 FR at 2792.
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The effect of the extension of the compliance dates on efficiency,
competition, or capital formation will be a delay in the impact of the
rule on efficiency, competition, and capital formation described in the
final rule. Additionally, the extension could mitigate the potential
impact on competition by giving smaller carrying broker-dealers the
opportunity to develop more cost-effective compliance approaches
because they will have more time to implement operational changes and
system and internal control upgrades.
The Commission considered reasonable alternatives to the new
compliance date, namely a longer extension. The Commission believes,
however, that, consistent with SIFMA's request, a six-month extension
is what is needed to facilitate the successful implementation of the
rule amendments.
III. Procedural and Other Matters
The Administrative Procedure Act (``APA'') generally requires an
agency to publish notice of a rulemaking in the Federal Register and
provide an opportunity for public comment. This requirement does not
apply, however, if the agency ``for good cause finds . . . that notice
and public procedure are impracticable, unnecessary, or contrary to the
public interest.'' \27\
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\27\ 5 U.S.C. 553(b)(B).
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For the reasons discussed below, the Commission, for good cause,
finds that notice and solicitation of comment regarding the extension
of the compliance date is impracticable, unnecessary, or contrary to
the public interest.\28\ This rule does not impose any new substantive
regulatory requirements on any person and merely reflects the extension
of the compliance date for carrying broker-dealers that become subject
to the daily computation requirements. Furthermore, carrying broker-
dealers subject to the daily computation requirement must begin
preparing well in advance of the compliance date in order to be fully
compliant with the daily computation requirement by that date. As a
result, many carrying broker-dealers, particularly those with more
complex customer and PAB reserve computations, would need to undertake
significant operational costs imminently in order to meet the December
31, 2025, compliance date, including making major staffing changes.
Providing immediate certainty of an extension is therefore needed to
allow carrying broker-dealers to avoid incurring unnecessary burdens
and other challenges associated with meeting the initial compliance
date.\29\
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\28\ See id. (stating that an agency may dispense with prior
notice and comment when it finds, for good cause, that notice and
comment are ``impracticable, unnecessary, or contrary to the public
interest'').
\29\ The compliance date extension set forth in this release is
effective upon publication in the Federal Register. Section
553(d)(1) of the APA allows effective dates that are less than 30
days after publication for a ``substantive rule which grants or
recognizes an exemption or relieves a restriction.'' 5 U.S.C.
553(d)(1).
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For similar reasons, although the APA generally requires
publication of a rule at least 30 days before its effective date, the
requirements of 5 U.S.C. 808(2) are satisfied (notwithstanding the
requirement of 5 U.S.C. 801),\30\ and the Commission finds that there
is good cause for this extension to take effect on July 1, 2025.
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\30\ See 5 U.S.C. 808(2) (if a Federal agency finds that notice
and public comment are impracticable, unnecessary or contrary to the
public interest, a rule shall take effect at such time as the
Federal agency promulgating the rule determines). This rule also
does not require analysis under the Regulatory Flexibility Act. See
5 U.S.C. 604(a) (requiring a final regulatory flexibility analysis
only for rules required by the APA or other law to undergo notice
and comment). Finally, this rule does not contain any collection of
information requirements as defined by the Paperwork Reduction Act
of 1995 (``PRA''). 44 U.S.C. 3501 et seq. Accordingly, the PRA is
not applicable.
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The Office of Management and Budget has determined that this action
is not a significant regulatory action as defined in Executive Order
12866, as amended, and therefore it was not subject to Executive Order
12866 review. Pursuant to the Congressional Review Act, the Office of
Information and Regulatory Affairs has designated the extension of the
compliance date not a ``major rule,'' as defined by 5 U.S.C. 804(2).
IV. Conclusion
The Commission extends the compliance date for the requirement to
perform a customer and PAB reserve computation daily rather than weekly
under paragraph (e)(3)(i)(B)(1) of Rule 15c3-3 by six months, to June
30, 2026.
By the Commission.
Dated: June 25, 2025.
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025-12016 Filed 6-30-25; 8:45 am]
BILLING CODE 8011-01-P
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