Notice2026-22740
Order Under Section 36 of the Securities Exchange Act of 1934 (the “Exchange Act”) Granting Conditional Exemptive Relief From Section 15(c)(3) of and Rule 15c3-3a, Note H Under the Exchange Act Relating to Certain Centrally Cleared U.S. Treasury Transactions
Primary source
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
November 9, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 215 (Monday, November 9, 2026)</title>
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[Federal Register Volume 91, Number 215 (Monday, November 9, 2026)]
[Notices]
[Pages 70924-70928]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22740]
[[Page 70924]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106821; File No. S7-2026-26]
Order Under Section 36 of the Securities Exchange Act of 1934
(the ``Exchange Act'') Granting Conditional Exemptive Relief From
Section 15(c)(3) of and Rule 15c3-3a, Note H Under the Exchange Act
Relating to Certain Centrally Cleared U.S. Treasury Transactions
November 4, 2026.
I. Introduction
A. Overview of Exemptive Order
The Securities and Exchange Commission (``Commission'') is granting
exemptive relief to broker-dealers from certain provisions of Note H to
Item 15 of Exhibit A to Exchange Act Rule 15c3-3 (``Rule 15c3-3a, Note
H'' or ``Note H'') pursuant to section 36 \1\ of the Exchange Act. More
specifically, the Commission is granting exemptive relief from the
application of Exchange Act section 15(c)(3) \2\ and Rule 15c3-3a, Note
H(b)(1) and (b)(2)(i) thereunder to permit broker-dealers to include a
debit in their Rule 15c3-3a customer and proprietary securities
accounts of other broker-dealers (``PAB'') \3\ reserve computations
(collectively ``reserve computations'') for margin required and on
deposit with a qualified clearing agency \4\ resulting from
transactions in U.S. Treasury securities in customer accounts that have
been cleared, settled, and novated by the clearing agency in cases
where the qualified clearing agency has calculated customer margin on
either a net, omnibus or gross, customer-by-customer basis, and the
broker-dealer has delivered the margin collateral on a net, omnibus
basis.\5\
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\1\ 15 U.S.C. 78mm. Section 36(a)(1) of the Exchange Act gives
the Commission the authority to exempt any person, security or
transaction or any class or classes of persons, securities or
transactions, conditionally or unconditionally, from any Exchange
Act provision by rule, regulation or order, to the extent that the
exemption is necessary or appropriate in the public interest and
consistent with the protection of investors.
\2\ 15 U.S.C. 78o(c)(3).
\3\ See 17 CFR 15c3-3(a)(16) (defining PAB account as 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.)
\4\ See Note H(a) (defining a ``qualified clearing agency'' as a
clearing agency registered with the Commission under section 17A of
the Exchange Act that clears, settles, and novates transactions in
U.S. Treasury securities).
\5\ See Note H(b)(2)(i) to Exhibit A to Rule 15c3-3, 17 CFR
240.15c3-3a.
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B. Background
Rule 15c3-3 under the Exchange Act, the broker-dealer customer
protection rule, requires broker-dealers that hold customer cash and
securities (``carrying broker-dealers'') to treat these assets in a
manner that facilitates their prompt return to the customers if the
broker-dealer fails financially. To meet this objective, Rule 15c3-3
requires a carrying broker-dealer to take two primary steps to
safeguard customer assets, which are designed to protect customers by
segregating their securities and cash from the carrying broker-dealer's
proprietary business activities. The first step requires carrying
broker-dealers to maintain physical possession or control over
customers' fully paid and excess margin securities.\6\ The second step
requires that a carrying broker-dealer maintain a reserve of cash or
qualified securities (e.g., U.S. Treasury securities) in an account at
a third-party bank that is at least equal in value to the net cash owed
to customers determined by a computation pursuant to a formula set
forth in Exchange Act Rule 15c3-3a, the customer reserve
computation.\7\ The goal of Rule 15c3-3 is to place a broker-dealer in
a position where it is able to wind down and return customer assets in
an orderly self-liquidation without the need for financial assistance.
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\6\ See 17 CFR 240.15c3-3(d).
\7\ See 17 CFR 240.15c3-3a (Formula for determination of
customer and PAB account reserve requirements of broker-dealers
under 17 CFR 240.15c3-3.).
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On December 13, 2023, the Commission adopted rules under the
Exchange Act to amend the standards applicable to certain clearing
agencies to enhance risk management practices for central
counterparties in the U.S. Treasury market and facilitate additional
clearing of U.S. Treasury securities.\8\ In the Treasury Clearing
Adopting Release, the Commission adopted amendments to Rule 15c3-3a to
permit margin required and on deposit at qualified clearing agencies
providing central counterparty services for U.S. Treasury securities to
be included by broker-dealers as a debit in the reserve computations,
subject to certain conditions.\9\
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\8\ See Standards for Covered Clearing Agencies for U.S.
Treasury Securities and Application of the Broker-Dealer Customer
Protection Rule With Respect to U.S. Treasury Securities, Exchange
Act Release No. 99149 (Dec. 13, 2023), 89 FR 2714 (Jan. 16, 2024)
(``Treasury Clearing Adopting Release'').
\9\ See id. at 2760-68. See also Note H to Exhibit A to Rule
15c3-3, 17 CFR 240.15c3-3a. The following types of transactions in
U.S. Treasury securities in customer accounts that have been
cleared, settled, and novated by the clearing agency are covered by
the Item 15 debit: (1) purchases and sales of U.S. Treasury
securities; and (2) U.S. Treasury securities repurchase and reverse
repurchase agreements (together ``customer position margin'').
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i. Gross vs. Net Customer Position Margin Requirement
Among the conditions necessary for including customer position
margin as a debit in the reserve computations is that customer position
margin must be treated in accordance with rules that must be adopted by
the qualified clearing agency.\10\ Paragraph (b)(2)(i) of Note H
requires the qualified clearing agency to calculate a separate margin
amount for each customer of the broker-dealer on a gross basis, and
requires the broker-dealer to deliver that amount of margin for each
customer on a gross, customer-by-customer basis.\11\ The Commission
adopted this requirement to ensure that the risk of one customer's
positions could not be offset by the risk of another customer's
positions in determining the amount of customer margin the broker-
dealer would need to have on deposit at the qualified clearing
agency.\12\ Thus, under existing Note H requirements, a broker-dealer
is not permitted to deliver assets belonging to one customer to meet
the margin requirement of another customer, and margin must be
calculated and delivered on a gross basis.\13\
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\10\ See Treasury Clearing Adopting Release, at 2764. See also
Note H(b)(2) to Exhibit A to Rule 15c3-3, 17 CFR 240.15c3-3a.
\11\ See Note H(b)(2)(i) to Exhibit A to Rule 15c3-3, 17 CFR
240.15c3-3a.
\12\ See Treasury Clearing Adopting Release, 89 FR at 2764. For
a discussion of the Commission's consideration of the alternative of
tailoring the requirement to permit a debit based on a margin amount
posted to the qualified clearing agency that is calculated on a net
basis across all the broker-dealer's customers, as is the case under
Item 13 and Note F in Rule 15c3-3a for margin required and on
deposit with the Options Clearing Corporation for all option
contracts written or purchased in customer accounts, see id. at
2764-65.
\13\ See Treasury Clearing Adopting Release, 89 FR at 2764.
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ii. Delivery of Customer Cash or Securities on Customer-by-Customer
Basis
Another condition, set forth in paragraph (b)(1) of Note H,
provides that the customer position margin must consist of any of the
following when delivered by the broker-dealer to meet a margin
requirement resulting from that particular customer's U.S. Treasury
securities positions that have cleared, settled, and novated at the
qualified clearing agency: (i) cash owed to the customer; or (ii) U.S.
Treasury securities or qualified customer securities held in custody by
the broker-dealer for the customer.\14\ Paragraph (b)(1) of Note H
[[Page 70925]]
also permits a broker-dealer to temporarily prefund a specific
customer's margin requirement, subject to strict limitations.\15\
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\14\ See Note H(b)(1)(i) and (ii).
\15\ See Note H(b)(1)(iii). Specifically, if delivering
proprietary U.S. Treasury securities to the qualified clearing
agency as margin collateral, the broker-dealer must: (1) not use
other types of securities collateral acceptable to the qualified
clearing agency; (2) not owe the customer or hold in custody for the
customer sufficient cash, U.S. Treasury securities, and/or qualified
customer securities to meet a margin requirement resulting from that
customer's U.S. Treasury securities positions cleared, settled, and
novated at the qualified clearing agency at the time the margin
requirement arose; and (3) call for the customer to deliver a
sufficient amount of cash, U.S. Treasury securities, and/or
qualified customer securities to meet the margin requirement on the
day the margin requirement arose, and must receive a sufficient
amount of cash, U.S. Treasury securities, and/or qualified customer
securities to meet the margin requirement by the close of the next
business day after the margin requirement arose. See also Treasury
Clearing Adopting Release, 89 FR at 2763.
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iii. Commission Approval of Qualified Clearing Agency Rules
The final condition to the application of the Item 15 debit, set
out in paragraph (b)(3) of Note H, requires the Commission to have
approved rules of the qualified clearing agency that meet the
conditions of Note H and has published (and not subsequently withdrawn)
a notice that broker-dealers may include the debit permitted by Note
H.\16\ At present, the Commission has published notices approving the
rules of three qualified clearing agencies under paragraph (b)(3) of
Note H, and has not subsequently withdrawn any of them.\17\
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\16\ See Note H(b)(3) to Exhibit A to Rule 15c3-3, 17 CFR
240.15c3-3a.
\17\ See Notice pursuant to Rule 15c3-3a, Note H(b)(3) Regarding
Application of the Customer Protection Rule Reserve Computations
with Respect to U.S. Treasury Securities, Exchange Act Release No.
34-101729 (Nov. 25, 2024), 89 FR 94801 (Nov. 29, 2024) (``FICC Note
H Approval Notice''); Notice pursuant to Rule 15c3-3a, Note H(b)(3)
Regarding Application of the Customer Protection Rule Reserve
Computations with Respect to U.S. Treasury Securities, Exchange Act
Release No. 105193 (Apr. 10, 2026); 91 FR 19241 (April 14, 2026)
(``CME Securities Clearing Inc. Note H Approval Notice''); Notice
pursuant to Rule 15c3-3a, Note H(b)(3) Regarding Application of the
Customer Protection Rule Reserve Computations with Respect to U.S.
Treasury Securities, Exchange Act Release No. 106267 (Sept. 3,
2026); 91 FR 57406 (Sept. 9, 2026) (``ICE Clear Credit LLC Note H
Approval Notice'').
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C. SIFMA's Application for Exemptive Relief
Pursuant to procedures set forth in Rule 240.0-12 of the Exchange
Act, the Securities Industry and Financial Markets Association
(``SIFMA'') filed an application for exemptive relief from section
15(c)(3) of the Exchange Act and Rule 15c3-3a, Note H(b)(1) and (2)(i)
thereunder pursuant to section 36 of the Exchange Act on June 24,
2026.\18\ SIFMA requested that the Commission grant exemptive relief to
permit broker-dealers to include an Item 15 debit in their customer
reserve computation in cases where the broker-dealer has delivered the
margin collateral on a net, omnibus basis, rather than on a gross,
customer-by-customer basis.\19\ The requested relief would apply to
customer accounts at a qualified clearing agency where the qualified
clearing agency calculates customer margin on either a net, omnibus or
gross, customer-by-customer basis that otherwise meets the conditions
of Note H (i.e., the conditions that are not exempted under SIFMA's
proposed request).\20\ Further, SIFMA requested that any exemptive
order issued by the Commission provide broker-dealers with the same
relief as to their PAB account holders and PAB reserve computation
under Rule 15c3-3a, subject to the same conditions.\21\
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\18\ See Notice of an Application of the Securities Industry and
Financial Markets Association for an Exemption Pursuant to Section
36 of the Securities Exchange Act of 1934 from Certain Conditions of
Note H to Exchange Act Rule 15c3-3a, Exchange Act Release No. 105980
(July 24, 2026), 91 FR 48201 (July 30, 2026) (``Notice of
Application''). The application for exemptive relief
(``Application'') is attached as an Appendix to the Notice of
Application, available at: <a href="https://www.sec.gov/files/rules/exorders/2026/34-105980.pdf">https://www.sec.gov/files/rules/exorders/2026/34-105980.pdf</a>.
\19\ See Notice of Application, 91 FR at 48202.
\20\ See id. at 48203.
\21\ See id.
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Section 36 of the Exchange Act authorizes the Commission to
conditionally or unconditionally exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from certain provisions of the Exchange Act or certain
rules or regulations thereunder, by rule, regulation, or order, to the
extent that such exemption is necessary or appropriate in the public
interest, and is consistent with the protection of investors.
On July 24, 2026, the Commission issued a Notice of Application
seeking comment on the Application. The Notice of Application was
published in the Federal Register on July 30, 2026 to provide
interested persons the opportunity to comment.\22\ The Commission did
not receive any comments on the Notice of an Application.\23\
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\22\ The comment period ended on August 31, 2026. See Notice of
Application, 91 FR at 48204.
\23\ See Notice of Application [File No. S7-2026-26].
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II. Discussion of Exemptive Relief
A. Statement of Relief
Since the Commission's adoption of the Treasury Clearing Adopting
Release, broker-dealers undertaking implementation have raised concerns
in letters and meetings with Commission staff about the inefficiencies
and costs of the gross basis requirement.\24\ For example, SIFMA stated
in its Application that implementing a strict customer-by-customer
framework would require broker-dealers to use highly granular systems
to map customer positions, margin requirements, and collateral flows to
individual customers across all clearance, settlement, and internal
records, as well as complex intraday reconciliation and enhanced data
infrastructure.\25\ In a letter sent to the Commission before
submitting its Application, SIFMA also stated that the cost concerns
raised from individual segregation due to the requirement to calculate
customer margin and deliver margin collateral on a gross, customer-by-
customer basis would discourage broker-dealers from onboarding smaller
market participants, who typically rely on qualified clearing agency
direct netting members for clearing U.S. Treasury transactions.\26\ As
a result, SIFMA added, a qualified clearing agency's direct
participants would be unable to apply the reserve formula debit for
these indirect participant accounts, leading to increased capital
constraints for broker-dealers in meeting customer margin
requirements.\27\
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\24\ See, e.g., Application, at 2.
\25\ See Application at 3.
\26\ See Letter from Kevin Zambrowicz, Deputy General Counsel
(Institutional) & Managing Director, SIFMA, to the Honorable Gary
Gensler, Chair, Commission (Oct. 23, 2024) (Application of the
Broker-Dealer Customer Protection Rule with Respect to U.S. Treasury
Securities Clearing), available at: <a href="https://www.sec.gov/comments/S7-23-22/s72322-834280-2549193.pdf">https://www.sec.gov/comments/S7-23-22/s72322-834280-2549193.pdf</a>.
\27\ See id. See also Letter from Kevin Zambrowicz, Deputy
General Counsel, SIFMA, to the Honorable Paul Atkins, Chair,
Commission (Nov. 19, 2025) (Treasury Clearing--The OCC-Model
Approach under Rule 15c3-3), available at: <a href="https://www.sec.gov/comments/S7-23-22/s72322-834300-2549193.pdf">https://www.sec.gov/comments/S7-23-22/s72322-834300-2549193.pdf</a> (stating that the
ability of broker-dealers to reflect a reserve formula debit in
instances where customer margin for U.S. Treasury transactions is
delivered to a qualified clearing agency through an omnibus
segregated account structure is critical to ensuring that broker-
dealers can continue to intermediate cleared access for indirect
participants, particularly buy-side clients and smaller market
participants, without facing undue liquidity strain stemming from
the current inability to reflect the reserve formula debit--an
operational gap leading to reserve requirements that do not
accurately reflect the actual risk posed to broker-dealers and the
financial system.).
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SIFMA further indicated in its Application that the systems and
infrastructure needed to fulfill the gross,
[[Page 70926]]
customer-by-customer margin calculation and posting requirements are
not aligned with the existing net, omnibus-based operational models
used in the intermediation of U.S. Treasury securities transactions,
and would become increasingly difficult to scale as clearing expands to
a broader set of market participants and intermediated
relationships.\28\ Where broker-dealers elect not to fully implement
the systems and processes necessary to support gross, customer-level
margining (and thus cannot use the Item 15 debit), SIFMA has indicated
that the resulting reserve computation treatment may not reflect the
economic substance of customer facilitation activity in U.S. Treasury
clearing, which could lead to duplicative capital and liquidity
requirements misaligned with the actual risk exposure to broker-dealers
intermediating customer access to central clearing.\29\
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\28\ See Application at 3-4.
\29\ See id. at 4. As SIFMA further stated in the Application,
the frictions caused by these constraints and increased costs of
central clearing could ultimately reduce participation and liquidity
in the U.S. Treasury market, which would undermine the Commission's
initial policy objectives in the Treasury Clearing Adopting Release
of expanded central clearing, by discouraging efficient access
pathways and increasing operational burdens without a corresponding
reduction in systemic risk. See id.
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The Commission finds that allowing the inclusion of a debit in Item
15 of the reserve computations where a qualified clearing agency has
calculated the required customer margin on either a net, omnibus or
gross, customer-by-customer basis, and the broker-dealer has delivered
the required customer margin collateral on a net, omnibus basis, when
subject to the conditions detailed below, is necessary or appropriate
in the public interest, and is consistent with the protection of
investors.
The operational complexities and challenges of the gross, customer-
by-customer margin and delivery requirements have proven greater than
anticipated before broker-dealers began to implement them. While the
Commission originally adopted Note H to require posting margin on a
gross, customer-by-customer basis for customer protection, the
operational complexity of the gross calculation and delivery approach
and the attendant potential negative impact for clearing of U.S.
Treasury securities transactions warrant allowing alternative margin
calculation and delivery approaches, with the enumerated conditions to
ensure that the exemptions in this order do not diminish the customer
protection objectives of Rules 15c3-3 and 15c3-3a.
This relief would also provide broker-dealers with more flexibility
to efficiently intermediate access to centrally cleared U.S. Treasury
markets while preserving the customer protection framework under Rule
15c3-3. Further, this relief would alleviate certain capital and
operational constraints that can arise through a gross, customer-by-
customer margining and delivery requirement, particularly when broker-
dealers serve smaller or indirect customers, thereby supporting broader
market access, enhancing liquidity, and advancing the Commission's goal
of promoting a deep, resilient, and inclusive U.S. Treasury market.
Finally, the alternative margin calculation and delivery approaches
will support a broker-dealer's customer facilitation activity in U.S.
Treasury clearing, particularly in light of the expansion of these
activities and the increased number of qualified clearing agencies.
The conditions of this order, discussed below in section II.B, are
designed to permit the Item 15 debit only in circumstances that provide
protections to customers consistent with the customer protection
objectives of Rules 15c3-3 and 15c3-3a without requiring a gross,
customer-by-customer calculation and collection of customer margin. For
example, Rule 15c3-3 requires broker-dealers to take steps to safeguard
customer assets by segregating their securities and cash from the
carrying broker-dealer's proprietary business activities.\30\ The
conditions in this order are designed to ensure that customer margin is
appropriately segregated and that a broker-dealer cannot use customer
cash and securities to finance its proprietary business activities.
Further, consistent with the conditions in Note H not exempted under
this order, the conditions of this order explicitly limit the exemption
to customer margin required and on deposit with a qualified clearing
agency for customer transactions in U.S. Treasury securities. These
conditions help reduce the likelihood of certain risks that may
undermine the customer protection objectives of Rule 15c3-3, including
that broker-dealers may not appropriately safeguard customer cash and
securities or may improperly include debits in their customer reserve
computation.
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\30\ See section I.B. of this order. See also Treasury Clearing
Adopting Release, 89 FR at 2761.
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Accordingly, after careful consideration of the Application, the
Commission is issuing, pursuant to section 36 of the Exchange Act,
conditional exemptive relief to permit broker-dealers to include an
Item 15 debit in their customer reserve computation in cases where a
qualified clearing agency has calculated customer margin on either a
net, omnibus or gross, customer-by-customer basis, and the broker-
dealer has delivered the margin collateral on a net, omnibus basis,
rather than on a gross, customer-by-customer basis. Further, the
Commission is providing broker-dealers with the same relief as to their
PAB account holders and PAB reserve computation under Rule 15c3-3a,
subject to the same conditions. This relief will permit either: (1) the
calculation and delivery of customer margin on a net, omnibus
basis,\31\ or (2) the calculation of margin on a gross, customer-by-
customer basis and the delivery of margin on a net, omnibus basis. The
following discussion describes conditions of the exemptive relief
provided by this order.
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\31\ Margin calculated on a ``net, omnibus basis'' refers to
margin calculations where the transactions in U.S. Treasury
securities for different customers are netted together as one
combined portfolio to calculate initial margin requirements at a
qualified clearing agency.
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B. Discussion of Conditions
The first condition limits the relief to margin that is required
and on deposit with a qualified clearing agency in connection with (1)
purchases and sales of U.S. Treasury securities; and (2) U.S. Treasury
securities repurchase and reverse repurchase agreements in customer
accounts that have been cleared, settled, and novated by the qualified
clearing agency. This condition is designed to reflect that the relief
provided hereby is limited to only those transactions covered under
Item 15 of Rule 15c3-3a and Note H.\32\ This condition also will
continue to ensure that margin required and on deposit at a qualified
clearing agency as a result of the broker-dealer's proprietary
positions may not be included as a debit in the reserve computations.
Therefore, this condition is designed to effectuate a fundamental
aspect of Rule 15c3-3 that a broker-dealer cannot use customer cash or
securities to finance its proprietary business activities.\33\
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\32\ See 17 CFR 240.15c3-3a, Item 15. This condition also will
continue to limit the relief to required margin which prevents the
broker-dealer from depositing cash or securities at a qualified
clearing agency that are not needed to meet a margin requirement in
order to artificially increase the debit (which could potentially
reduce the broker-dealer's required deposit).
\33\ See Treasury Clearing Adopting Release, 89 FR at 2761.
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The second condition provides that the broker-dealer must deliver
the following types of cash and securities to the qualified clearing
agency to meet the
[[Page 70927]]
customer margin requirement: (1) cash; (2) U.S. Treasury securities;
(3) qualified customer securities; \34\ or (4) any combination of items
(1)-(3).\35\ This condition limits the scope of assets that are
permissible to use as collateral delivered to the qualified clearing
agency to those currently permitted under Note H to Rule 15c3-3a. The
Commission is retaining the limitation on the permitted use of
proprietary securities as margin collateral to U.S. Treasury securities
to ensure that only the safest, most liquid securities of the broker-
dealer are ever commingled with the customer cash and securities.\36\
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\34\ As used in Note H, the term ``qualified customer
securities'' means the securities of a customer of the broker-dealer
(other than U.S. Treasury securities) that are held in custody by
the broker-dealer for the customer and that under the rules of the
qualified clearing agency are eligible to be used to margin U.S.
Treasury securities positions of the customer that are cleared,
settled, and novated by the qualified clearing agency. See Note H(c)
to Rule 15c3-3a.
\35\ The words ``proprietary or customer'' were omitted before
the words ``cash'' or ``U.S. Treasury securities'' as described in
the Application, because the eligible collateral under this
exemptive relief that is cash or U.S. Treasury securities would
necessarily be either proprietary or customer assets. As this
exemptive relief is to permit broker-dealers to deliver the margin
collateral to a qualified clearing agency on a net, omnibus basis,
the use of these terms within the scope of this condition is
unnecessary.
\36\ See Treasury Clearing Adopting Release, 89 FR at 2763.
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The third condition limits the amount the broker-dealer is
permitted to include in the Item 15 debit in the reserve computations
to equal the least of: (1) the amount of margin collected from
customers in connection with customer U.S. Treasury securities
transactions; (2) the amount of margin required for customer U.S.
Treasury securities positions; or (3) the total of: (a) cash, (b) U.S.
Treasury securities, and (c) qualified customer securities delivered by
the broker-dealer to meet a margin requirement arising from customer
U.S. Treasury securities positions.\37\
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\37\ The word ``customer'' was omitted before the words ``cash''
or ``U.S. Treasury securities'' as described in the Application.
Eligible collateral under this exemptive relief that is cash or U.S.
Treasury securities would be either proprietary or customer assets,
as this exemptive relief is to permit broker-dealers to deliver the
margin collateral to a qualified clearing agency on a net, omnibus
basis.
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Given the greater operational flexibility that net, omnibus
margining and posting entails, this third condition is designed to make
sure that the permitted Item 15 debit is conservative and directly
related to customer-related credit items consistent with the
requirements of Rule 15c3-3.\38\ Specifically, the condition is
designed to protect investors by specifying that broker-dealers can
only obtain the full amount of the potential debit under Item 15 when
they collect from customers the full amount of margin required for
their U.S. Treasury securities positions, and subsequently deliver the
full amount of that margin to the qualified clearing agency to meet
such margin requirements.
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\38\ See paragraph (e)(2) to Rule 15c3-3 (stating that ``with
respect to each computation required pursuant to paragraph (e)(1) of
Rule 15c3-3, a broker-dealer must not accept or use any of the
amounts under items comprising total credits under the formula
referred to in paragraph (e)(1) of Rule 15c3-3 except for the
specified purposes indicated under items comprising total debits
under the formula''.).
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The ``least of'' structure under the third condition will permit
broker-dealers to post margin collateral on a net, omnibus basis, which
may result in one customer's collateral being used to cover another
customer's margin requirement. However, customers will continue to be
afforded the customer protections provided by Rule 15c3-3, as well as
the other provisions of Note H, which remain applicable under this
exemptive relief. This includes the protections afforded to customers
by the continued requirement that broker-dealers include free credit
balances and other credit balances in customers' securities accounts as
credits in Item 1, and the market value of customers' securities on
deposit at a qualified clearing agency in Item 2, of their customer
reserve computations.\39\
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\39\ See 17 CFR 240.15c3-3a, Items 1 and 2.
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Further, the third condition explicitly limits the permitted Item
15 debit to permissible cash and securities collateral delivered to a
qualified clearing agency. Consistent with the first condition, the
broker-dealer may not include in the Item 15 debit amounts on deposit
at a qualified clearing agency that exceed the margin requirement
resulting from its customers' cleared U.S. Treasury securities
positions.
The fourth condition requires that the broker-dealer must maintain
books and records sufficient to identify the amount of customer margin
collected and delivered to the qualified clearing agency. These books
and records will permit the Commission, Commission staff or the broker-
dealer's designated examining authority to examine for compliance with
the specific conditions of this exemptive order. This condition also
will facilitate compliance with the third condition to this order by
helping ensure the broker-dealer only includes in the Item 15 debit the
appropriate, permitted amount within its reserve computations. In doing
so, this fourth condition will also help ensure that the relief
provided in this order remains consistent with the customer protection
objectives of Rule 15c3-3 by better ensuring compliance with both the
conditions of this exemptive order and the other requirements of Rule
15c3-3 and Note H thereunder.
The fifth condition requires that the rules of the qualified
clearing agency must have been amended as necessary to reflect the
conditions of this exemptive order. This condition is designed to
require that broker-dealers may only include an Item 15 debit in their
reserve computations pursuant to this order where the rules of the
qualified clearing agency have been amended to reflect the conditions
of this exemptive order. This will also ensure that the rules of a
qualified clearing agency that are amended in accordance with the
conditions of this order adequately implement the customer protection
objectives of Rule 15c3-3 and Rule 15c3-3a.\40\
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\40\ See Treasury Clearing Adopting Release, 89 FR at 2768.
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The fifth condition also is designed, for similar reasons to those
discussed in the Treasury Clearing Adopting Release pertaining to
adoption of paragraph (b)(3) of Note H, which, as discussed in section
I.B.iii. above, requires the Commission to have approved rules of the
qualified clearing agency that meet the conditions of Note H and
publish a notice (and not subsequently withdrawn the notice) that
broker-dealers may include an Item 15 debit in their reserve
computations for a particular qualified clearing agency.\41\ The
Commission is not hereby withdrawing any previously published notices
approving the rules of any qualified clearing agency that meet the
conditions of Note H, and broker-dealers may continue to rely upon them
to include a debit in Item 15 of their reserve computations when
complying with the requirements of Note H.\42\ To the extent a
qualified clearing agency amends its rules to comply with the
conditions of this order, broker-dealers may include an Item 15 debit
in their reserve computations if they comply with the other conditions
of this order, including the seventh condition, discussed below, which
conditions this exemptive relief on continued compliance with the other
applicable conditions of Note H not exempted under this order.
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\41\ See Note H(b)(3) to Exhibit A to Rule 15c3-3, 17 CFR
240.15c3-3a. See also Treasury Clearing Adopting Release, 89 FR at
2767-68.
\42\ See FICC Note H Approval Notice, CME Securities Clearing
Inc. Note H Approval Notice, and ICE Clear Credit LLC Note H
Approval Notice.
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The sixth condition provides that the broker-dealer must adopt and
implement written policies and
[[Page 70928]]
procedures reasonably designed to ensure ongoing compliance with the
conditions of this exemptive order. This condition will help ensure
firms develop the operational and process controls necessary to ensure
that they can comply with the conditions of this order on an ongoing
basis.
The seventh condition provides that to the extent a broker-dealer
delivers margin to a qualified clearing agency pursuant to this relief,
such margin must remain subject to the other applicable conditions of
Note H not exempted under this order, including paragraphs (b)(2)(ii)
through (v). The Commission is adopting this condition to explicitly
reflect the limitation on the scope of the exemptive relief this order
provides. Further, this condition is designed to ensure that broker-
dealers comply with the other applicable conditions of Note H not
exempted under this order, which were designed to permit a debit under
circumstances that provide protections to customers.
The relief is narrowly tailored to what is necessary to permit a
broker-dealer to include an Item 15 debit in the reserve computations
without a gross calculation and delivery requirement, in a manner that
is consistent with the customer protection objectives of Rule 15c3-3.
For the reasons discussed above, providing this exemption is
necessary or appropriate in the public interest, and is consistent with
the protection of investors.
III. Conclusion
Accordingly, it is hereby ordered, pursuant to section 36(a)(1) of
the Exchange Act, that a broker-dealer is exempt from the requirement
in paragraph (b)(2)(i) of Note H of Rule 15c3-3a to deliver the
separate margin amount for each customer of the broker-dealer
calculated by the qualified clearing agency on a gross, customer-by-
customer basis, as well as the requirement in paragraph (b)(1) of Note
H of Rule 15c3-3a for a broker-dealer to deliver customer cash or
securities to a qualified clearing agency on a gross, customer-by-
customer basis or to temporarily prefund a specific customer's margin
requirement, provided the conditions below are met. Under this
conditional exemption, broker-dealers may include a debit in their
reserve computations for margin required and on deposit with a
qualified clearing agency resulting from transactions in U.S. Treasury
securities in customer accounts that have been cleared, settled, and
novated by the clearing agency, in cases where the broker-dealer has
delivered the margin collateral on a net, omnibus basis. This relief
applies to customer accounts at a qualified clearing agency where the
qualified clearing agency calculates margin on either a net, omnibus or
gross, customer-by-customer basis, subject to the following conditions:
(1) Eligibility Limitation: The relief applies solely to margin
required and on deposit with a qualified clearing agency in connection
with the following types of transactions in U.S. Treasury securities in
customer accounts that have been cleared, settled, and novated by the
qualified clearing agency: (1) purchases and sales of U.S. Treasury
securities; and (2) U.S. Treasury securities repurchase and reverse
repurchase agreements.
(2) The broker-dealer delivers the following cash and securities to
the qualified clearing agency to meet the customer margin requirement:
(i) cash;
(ii) U.S. Treasury securities;
(iii) qualified customer securities; or
(iv) any combination of clauses (i) through (iii) above.
(3) Permitted Debit. The amount the broker-dealer includes in the
Item 15 debit in the reserve computations must equal the least of:
(i) the amount of margin collected from customers in connection
with U.S. Treasury securities transactions of the broker-dealer's
customers that are cleared, settled, and novated by the qualified
clearing agency;
(ii) the amount of margin required for U.S. Treasury securities
positions of the broker-dealer's customers that are cleared, settled,
and novated by the qualified clearing agency; or
(iii) the total of: (A) cash, (B) U.S. Treasury securities, and (C)
qualified customer securities delivered by the broker-dealer to the
qualified clearing agency to meet margin requirements arising from U.S.
Treasury positions of the broker-dealer's customers that are cleared,
settled and novated at the qualified clearing agency.
(4) Documentation: The broker-dealer must maintain books and
records sufficient to identify the amount of customer margin collected
and delivered to the qualified clearing agency.
(5) Qualified Clearing Agency Rulebook Amendments. The rules of the
qualified clearing agency must have been amended to reflect the
conditions of this exemptive order.
(6) Procedures: The broker-dealer must adopt and implement written
policies and procedures reasonably designed to ensure ongoing
compliance with the conditions of this exemptive order.
(7) To the extent a broker-dealer delivers margin to a qualified
clearing agency consistent with this exemptive order, such margin must
remain subject to the other applicable conditions of Note H not
exempted under this order, including paragraphs (b)(2)(ii) through (v).
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-22740 Filed 11-6-26; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on November 9, 2026.
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