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15c3: Difference between revisions
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The [[Securities Exchange Act of 1934|Securities Exchange Act]]’s vaunted Rule [[15c3]], “[[Customer protection - reserves and custody of securities]]” was enacted in 1972 with the intention to protect client accounts at [[broker]]s following the 1968 Wall Street Paperwork Crunch — a financial markets disaster which curiously doesn’t get a lot of play these days even though it caused firms to fail and clients to lose money. | {{a|pb|}}The [[Securities Exchange Act of 1934|Securities Exchange Act]]’s vaunted Rule [[15c3]], “[[Customer protection - reserves and custody of securities]]” was enacted in 1972 with the intention to protect client accounts at [[broker]]s following the 1968 Wall Street Paperwork Crunch — a financial markets disaster which curiously doesn’t get a lot of play these days even though it caused firms to fail and clients to lose money. | ||
[[15c3]] requires[broker-dealer]]s to [[segregate]] a portion of their [[cash]] and [[securities]] and keep them in protected accounts from which clients can withdraw their holdings on demand, even on insolvency of the [[broker-dealer]]. | [[15c3]] requires [[broker-dealer]]s to [[segregate]] a portion of their [[cash]] and [[securities]] and keep them in protected accounts from which clients can withdraw their holdings on demand, even on insolvency of the [[broker-dealer]]. | ||
Broker-dealers must, weekly, calculate what they and their clients owe each other and where the customer is a net creditor, lock up a portion in a “special reserve bank account for the exclusive benefit of customers.” | Broker-dealers must, weekly, calculate what they and their clients owe each other and where the customer is a net creditor, lock up a portion in a “special reserve bank account for the exclusive benefit of customers.” | ||
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It's like a capital buffer. | It's like a capital buffer. | ||
Just the bit — 15c3-3 — that talks about [[rehypothecation]] runs to | Just the bit — 15c3-3 — that talks about [[rehypothecation]] (well it ''may'' do — personally i lost the will to live with 9 page definition of “Customer”) runs to 200 pages. [http://www.finra.org/industry/interpretationsfor/sea-rule-15c3-3 Have fun]. | ||