SEC Seeks Changes to Protect Customers against Broker-Dealers’ Failure
- The regulator wants broker-dealers to calculate their net cash daily rather than weekly.
- In recent months, the SEC introduced other changes to the securities trading industry.
The US securities regulator today (Wednesday) proposed an amendment to rules that require broker-dealers to segregate customer funds and securities from their own assets. Specifically, the Securities and Exchange Commission (SEC Securities and Exchange Commission (SEC) The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha Read this Term) wants securities trading firms to calculate the net cash owed to customers and other broker-dealers daily instead of weekly. For both parties, this cash is required to be held in special reserve bank accounts.
Today we proposed enhancements to the rule that protects a customer’s cash and securities held at a broker-dealer, increasing from weekly to daily the frequency of the computations of the net cash a broker-dealer owes to customers and other broker-dealers.https://t.co/HECd0F2eeB pic.twitter.com/ZYvY0xBDt9
— U.S. Securities and Exchange Commission (@SECGov) July 12, 2023
SEC Eyes Change in Reserve Deposit
The SEC explained that the purpose of the proposed change is to help broker-dealers match the amount of cash they owe their customers and external broker-dealers, with the amount they deposit in reserve bank accounts meant for them.
As a result, the regulator is proposing that broker-dealers with net cash equal to or more than $250 million must calculate the amount daily and deposit the cash into the reserve by the end of the following business day. The regulator noted that this will make it less likely that ‘large mismatches' will build up over time, predisposing customers to greater losses should a broker-dealer fail.
“Given the speed, scale, and volume of today’s market activity, I believe customers would benefit if broker-dealers carrying large credit balances made daily reserve account calculations and deposits,” the Chair of the SEC, Gary Gensler noted. “This frequency would better align with the inflows, swings, and balances that broker-dealers experience in today’s markets.”
The SEC is currently collating public comments on the proposal. It mentioned that it will gather public opinions for 30 days after the proposal is published in the Federal Register.
The proposed amendment comes amid the SEC's crackdown on cryptocurrency exchanges whose offerings it believes are unregistered securities. In its recent lawsuit against Binance, the regulator raised concerns about the crypto exchange mixing clients' funds with its assets.
Recent Amendments by the SEC
Meanwhile, the SEC in recent months proposed other amendments to the rules binding the securities trading industry. In March, the financial market supervisor finalized a change to its policy that requires broker-dealer securities transactions to be settled within one business day (T+1).
On top of that, the regulator recently proposed amendments to its information collection procedures. The SEC said it wants broker-dealers, clearing agencies and security-based swap dealers, among others, to submit 'a number of filings' electronically, Finance Magnates reported.
eToro's CFDs fees; hirings at Exinity, Scope Markets; read today's news nuggets.
The US securities regulator today (Wednesday) proposed an amendment to rules that require broker-dealers to segregate customer funds and securities from their own assets. Specifically, the Securities and Exchange Commission (SEC Securities and Exchange Commission (SEC) The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha Read this Term) wants securities trading firms to calculate the net cash owed to customers and other broker-dealers daily instead of weekly. For both parties, this cash is required to be held in special reserve bank accounts.
Today we proposed enhancements to the rule that protects a customer’s cash and securities held at a broker-dealer, increasing from weekly to daily the frequency of the computations of the net cash a broker-dealer owes to customers and other broker-dealers.https://t.co/HECd0F2eeB pic.twitter.com/ZYvY0xBDt9
— U.S. Securities and Exchange Commission (@SECGov) July 12, 2023
SEC Eyes Change in Reserve Deposit
The SEC explained that the purpose of the proposed change is to help broker-dealers match the amount of cash they owe their customers and external broker-dealers, with the amount they deposit in reserve bank accounts meant for them.
As a result, the regulator is proposing that broker-dealers with net cash equal to or more than $250 million must calculate the amount daily and deposit the cash into the reserve by the end of the following business day. The regulator noted that this will make it less likely that ‘large mismatches' will build up over time, predisposing customers to greater losses should a broker-dealer fail.
“Given the speed, scale, and volume of today’s market activity, I believe customers would benefit if broker-dealers carrying large credit balances made daily reserve account calculations and deposits,” the Chair of the SEC, Gary Gensler noted. “This frequency would better align with the inflows, swings, and balances that broker-dealers experience in today’s markets.”
The SEC is currently collating public comments on the proposal. It mentioned that it will gather public opinions for 30 days after the proposal is published in the Federal Register.
The proposed amendment comes amid the SEC's crackdown on cryptocurrency exchanges whose offerings it believes are unregistered securities. In its recent lawsuit against Binance, the regulator raised concerns about the crypto exchange mixing clients' funds with its assets.
Recent Amendments by the SEC
Meanwhile, the SEC in recent months proposed other amendments to the rules binding the securities trading industry. In March, the financial market supervisor finalized a change to its policy that requires broker-dealer securities transactions to be settled within one business day (T+1).
On top of that, the regulator recently proposed amendments to its information collection procedures. The SEC said it wants broker-dealers, clearing agencies and security-based swap dealers, among others, to submit 'a number of filings' electronically, Finance Magnates reported.
eToro's CFDs fees; hirings at Exinity, Scope Markets; read today's news nuggets.