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Statement on Proposed Daily Computation of Customer and Broker-Dealer Reserve Requirements under the Broker-Dealer Customer Protection Rule

July 12, 2023

Thank you, Chair Gensler.  Today, the Commission proposes to amend the broker-dealer customer protection rule to require certain broker-dealers to compute their customer and broker-dealer reserve deposit requirements on a daily basis, rather than weekly.[1]  As the Proposing Release describes, carrying broker-dealers—that is, those that maintain custody of customer securities and cash—currently must have a special reserve account at a bank that holds qualified securities and/or cash in an amount determined by a weekly computation.[2]  The proposed amendments would require some carrying broker-dealers—specifically, those beyond a threshold of average total credits of $250 million—to make such computations and required deposits on a daily basis. 

The Commission’s regulations should seek sensible and cost-effective amelioration of risk.  The current weekly calculation raises the possibility of situations where market movements resulting in the net amount of cash owed by large carrying broker-dealers to customers—including cash owed to other broker-dealers in so-called “PAB” accounts—to be substantially greater in amount than what is held in the pertinent reserve bank accounts.[3]  At the same time, the ability of broker-dealers to track these calculations on a daily basis appears to be less costly than in the past.  Keeping reserve bank accounts up-to-date on a daily basis can provide better customer protection and ameliorate systemic risk.

One item to note here is the pertinent data that was included in the Proposing Release, which may be of special assistance in evaluating this proposal, particularly in terms of where to best draw the threshold requiring this daily computation.[4]  The Staff is to be commended on compiling this evidence, which constitutes a valuable starting point for the comment process.  Indeed, the data and observations of current broker-dealer practices are sufficiently robust so as to persuade me that the proposal is appropriate for public comment. 

As always, I look forward to the public comments that will inform any future action of the Commission.  I thank the staff in the Divisions of Trading and Markets and Economic and Risk Analysis as well as the Office of General Counsel for their efforts.


[1] See Daily Computation of Customer and Broker-Dealer Reserve Requirements under the Broker-Dealer Customer Protection Rule, Release No. 34-97877 (July 12, 2023) (“Proposing Release”), at 1, available at

[2] Id. at 5-6.

[3] Id. at 7. 

[4] See Economic Analysis, Id.

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