[co-author: Carlos Juarez]*
On August 6, 2025, the Staff of the Division of Trading and Markets of the Securities and Exchange Commission (SEC) released an updated set of Frequently Asked Questions (FAQs) addressing the application of Rule 15c3-3a to cleared US Treasury securities. While these responses reflect only staff views and are not an SEC rulemaking, they provide interpretive guidance for broker-dealers navigating the evolving Treasury market clearing framework.
In November 2024, the SEC approved a Fixed Income Clearing Corporation (FICC) rule change aligning its Government Securities Division (GSD) Rulebook with the requirements of Note H to Rule 15c3-3a. Shortly thereafter, the SEC published a notice authorizing broker-dealers to include a debit in their customer reserve formula when posting cash, Treasuries, and/or qualified customer securities to FICC to satisfy customer margin obligations. The August 2025 FAQs build on that framework. Read the full FAQs on the SEC’s website. A summary follows below.
- Notice pursuant to Rule 15c3-3a, Note H(b)(3) Regarding Application of the Reserve Formulas with Respect to Cleared U.S. Treasury Securities. The SEC approved a rule change by the FICC in late 2024, aligning FICC-GSD’s rulebook with Rule 15c3-3a Note H. This allows broker-dealers to include a debit in the customer and/or PAB reserve formula when depositing cash, Treasuries and/or qualified customer securities to meet margin requirements resulting from Treasury positions of customers. See Question 1.
- Credits in Customer Reserve Formula Related to Item 15 Debit. Customer cash used to meet margin requirements must be included as a credit in Item 1 of the reserve formula. The market value of customers’ securities deposited at a qualified clearing agency must be included as a credit in Item 2. See Question 2.
- Prefunding Customer Margin Requirements with Cash or U.S. Treasury Securities Owned by the Broker-Dealer. Broker-dealers may use their own cash or Treasuries to meet margin requirements resulting a customer’s Treasury positions, provided conditions of Note H(b)(1)(iii)(A) through (C) are met. On Day 1 of prefunding a customer margin requirement, a broker-dealer may include an Item 15 debit in the customer reserve formula for the amount of the margin requirement without a corresponding credit, if (i) the broker-dealer has delivered cash/Treasuries to temporarily prefund the margin requirement and calls for margin from the customer under the conditions of Note H(b)(1)(iii)(A) and (B), respectively, and (ii) the customer has not yet provided collateral to the broker-dealer under Note H(b)(1)(iii)(C), which requires that a sufficient amount of collateral to meet the margin requirement be received by the close of the next business day after the margin requirement arose (i.e., Day 2). See Question 3 and Question 4.
- Use of Customers’ Securities to Meet a Margin Requirement. Broker-dealers can post a customer’s securities that would otherwise need to be treated as fully paid or excess margin securities to meet that customer’s margin requirement, consistent with Note H. See Question 5.
- Excess Margin Collateral. Excess margin collateral cannot be included as an Item 15 debit (which is limited to margin required and on deposit). Firms are incentivized to retrieve excess collateral promptly, since excess margin remains a credit with no offsetting debit if the excess margin amount is no longer required by the clearing agency. See Question 6.
- Mark-to-Market or Variation Margin Payments. Cash delivered by a customer to a broker -dealer for mark-to-market or variation margin payments need not be considered a credit item since the broker-dealer is not required to return these payments to the customer. However, any cash in excess of a mark-to-market or variation margin amount that a broker-dealer owes to a customer must be included in the reserve formula. See Question 7.
- Customers Borrowing Against Other Customer Collateral to Meet a Margin Requirement of a Qualified Clearing Agency. A broker-dealer may extend credit to a customer in the form of cash collateralized by margin securities in the customer’s account to fund the customer’s margin requirement at a qualified clearing agency. Both an Item 15 debit and an Item 10 debit may be recognized in the reserve formula, as applicable, for these two separate transactions if the conditions of Note H and other requirements of Rule 15c3-3a are satisfied. See Question 8.
- PAB Account Holders and the PAB Reserve Formula. The guidance applies equally to PAB account holders and PAB reserve computations. See Question 9.
*Summer Associate
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