SEC Staff Issues FAQs to Help Broker-Dealers Implement Customer Protection Rule Amendments related to US Treasury Clearing

Client Alert

On August 6, 2025, the Securities and Exchange Commission's Division of Trading and Markets (the “Division”) issued responses to Frequently Asked Questions (“FAQs”) regarding rule amendments to Rule 15c3-3a under the Securities Exchange Act of 1934 (the “Customer Protection Rule amendments”) related to the reserve calculations for clearing US Treasury securities (“Treasury Securities”). The Division’s FAQs provide guidance for broker-dealers as they prepare for the approaching compliance dates of December 31, 2026, and June 30, 2027, for mandatory central clearing of cash and repo transactions, respectively, in Treasury Securities.

Background, Objectives, and Regulatory Context

The Customer Protection Rule amendments were adopted in conjunction with the SEC’s Treasury Securities clearing mandate,¹ with the aim of reducing the cost of clearing and freeing up resources that could be used to meet the margin requirements of a clearing agency registered with the SEC that clears, settles, and novates transactions in Treasury Securities (a “qualified clearing agency” or “QCA”).² Specifically, the amendments added new Item 15 to the reserve formula to permit margin required and on deposit with a QCA to be included as a debit when computing reserve requirements with respect to customers and proprietary accounts of broker-dealers (‘‘PAB’’), subject to certain conditions.³

Key Interpretations and Guidance from the FAQs

The FAQs provide interpretive guidance for broker-dealers navigating the new requirements:

• Reserve Formula Debits and Credits: Note H to Rule 15c3-3a sets out the conditions for a broker-dealer to record a debit in respect of margin required and on deposit with a Treasury Securities QCA.
  

  Among these are conditions that the QCA has adopted rules – approved by the SEC – that require the QCA to take certain steps with regard to customer and PAB account holder margin received from a broker-dealer, including calculating a separate margin amount for each customer of the broker-dealer, requiring that broker-dealers deliver margin on a gross basis, and holding the margin in a segregated account used exclusively to clear, settle, novate, and margin Treasury Securities transactions of the customers of the broker-dealer. A further condition is that the SEC has published (and not subsequently withdrawn) a notice that broker-dealers may include the debit in the customer reserve formula.

  The FAQs confirm that the two conditions of Note H(b)(3) – SEC approval of QCA rules that satisfy the Note H conditions and publication of a notice that broker-dealers may include the Item 15 debit⁴ – have been satisfied with respect to the Fixed Income Clearing Corporation (“FICC”). The FAQs cite in this regard the SEC’s approval, on November 21, 2024, of a proposed FICC rule change⁵ and the SEC’s notice pursuant to Rule 15c3-3a, Note H(b)(3), published on November 25, 2024.⁶

  In addition, the FAQs provide guidance on the recording of the reserve formula credits related to the Item 15 debit. Cash delivered by a customer to the broker-dealer that the broker-dealer posts to a qualified clearing agency must be included in Item 1 (Free credit balances and other credit balances in customers’ security accounts) to the customer reserve formula. With regard to customer securities, the FAQs reiterate that the SEC amended Note B to Item 2 of Rule 15c3-3a to instruct broker-dealers to include as a credit in Item 2 the market value of customers’ securities on deposit at a qualified clearing agency.

• Prefunding Customer Margin Requirements: Note H(b)(1)(iii) permits Treasury Securities owned by the broker-dealer (as distinct from securities held in custody for a customer) to be delivered as margin and included as an Item 15 debit in the limited circumstances specified in conditions (A) through (C) of Note H(b)(1)(iii). The FAQs state that Division staff would not object if a broker-dealer delivers cash (in addition to Treasury Securities owned by the broker-dealer) to a qualified clearing agency to meet a customer’s margin requirement resulting from the customer’s Treasury Securities positions at the qualified clearing agency, provided that the broker-dealer meets the conditions of Note H(b)(1)(iii)(A) through (C). As stated in condition (b)(1)(iii)(A), this applies when the broker-dealer did not owe to the customer or hold in custody for the customer sufficient cash, Treasury Securities, and/or qualified customer securities to meet a margin requirement resulting from
  that customer's Treasury Securities positions. A broker-dealer that prefunds a customer margin requirement in accordance with these conditions may recognize an Item 15 debit in the reserve formula on Day 1 of the prefunding, despite the absence of a corresponding credit. However, as conditions (b)(1)(iii)(B) and (C) state, the broker-dealer must call for margin from the customer on the day the margin requirement arose and must receive sufficient margin by the close of the next business day.
• Use of Customer Securities: Broker-dealers may use a customer’s fully paid or excess margin securities to meet margin requirements at a qualified clearing agency for the customer’s cleared Treasury Securities positions, subject to the protections and limitations in Note H.
• Excess Margin Collateral: Excess margin collateral held at a qualified clearing agency resulting from a customer’s cleared Treasury Securities positions may not be included as an Item 15 debit in the customer reserve formula. Only the amount of margin required and on deposit at the qualified clearing agency may be included as a debit; any excess margin remains a credit in the reserve formula, incentivizing the broker-dealer to obtain prompt return of excess collateral from the qualified clearing agency. 
• Treatment of Variation Margin: Cash delivered by customers to meet mark-to-market or variation margin payments at a clearing agency is not required to be included as a credit in the reserve formula, as these payments are not subject to return to customers.⁷ However, any cash in excess of a mark-to-market or variation margin amount that a broker-dealer owes a customer would be subject to the reserve formula requirements of Rule 15c3-3.  
• Customer Borrowing and Margin Loans: Broker-dealers may extend credit to a customer, collateralized by margin securities, to fund margin requirements at a qualified clearing agency resulting from the customer’s cleared Treasury Securities positions, and may recognize both the margin loan and the clearing agency margin as separate debits⁸ in the reserve formula, provided all conditions are met.
• Application to PAB Accounts: A broker-dealer may apply the FAQs to its PAB account holders and PAB reserve formula, as applicable. In affirming that the interpretive guidance in the FAQs applies equally to PAB accounts and the related reserve computations, the Division cites the discussion in the Treasury Clearing Release regarding the amendment to Note 9 to Rule 15c3-3a which clarifies that the conditions of Note H with respect to including a debit in the non-PAB customer reserve computation also apply to the PAB reserve computation.

1. Standards for Covered Clearing Agencies for US Treasury Securities and Application of the Broker-Dealer Customer Protection Rule with respect to US Treasury Securities, Exchange Act Release No. 99149 (Dec. 13, 2023), 89 FR 2714 (Jan. 16, 2024) (“Treasury Clearing Release”)
2. Treasury Clearing Release, 89 FR at 2817.
3. See Rule 15c3-3a, Note H.
4. An Item 15 debit is a debit in the reserve formula computation that corresponds to the amount of margin required and on deposit with a QCA resulting from the following types of transactions in Treasury Securities in customer accounts that have been cleared, settled, and novated by the QCA: (a) purchases and sales of Treasury Securities; and (b) Treasury Securities repurchase, and reverse repurchase agreements.
5. Order Approving Proposed Rule Change, as Modified by Partial Amendment No. 1, to Modify the GSD Rules (i) Regarding the Separate Calculation, Collection and Holding of Margin for Proprietary Transactions and That for Indirect Participant Transactions, and (ii) to Address the Conditions of Note H to Rule 15c3-3a, Exchange Act Release No. 101695 (Nov. 21, 2024), 89 FR 93763 (Nov. 27, 2024). The FICC rule change was implemented on March 24, 2025. See FAQs n.3; FICC Notice GOV1913, available at https://www.dtcc.com/-/media/Files/pdf/2025/3/20/GOV1913-25---US-Treasury-Clearing-Rule-Changes---Risk-Management-Information.pdf .
6. Notice pursuant to Rule 15c3-3a, Note H(b)(3) Regarding Application of the Customer Protection Rule Reserve Computations with Respect to US Treasury Securities, Exchange Act Release No. 101729 (Nov. 25, 2024), 89 FR 94801 (Nov. 29, 2024).
7. The FAQs cite the fact that changes in the value of securities when they are marked to market are included as funds-only settlement amounts, rather than collateral payments, under the FICC rules.
8. See Items 15 and 10 of the customer reserve formula. The Item 10 debit represents the margin loan in the form of cash collateralized by margin securities in the customer’s securities account.

Relevant Documents