SEC Permits Broker-Dealers to Include Debits for CME Treasury Margin

The SEC notified broker-dealers that they could include a debit in their customer reserve computations when depositing assets to meet certain customer-related clearing agency margin requirements. 

The Notice applies to SEA Rule 15c3-3a ("Customer protection-reserves and custody of securities,") and confirmed that broker-dealers may include a debit in their reserve computations when depositing cash, U.S. Treasury securities, or qualified customer securities to meet margin requirements at CME Securities Clearing Inc. ("CMESC"). To rely on this relief, broker-dealers must meet all conditions set forth in the relevant note to the reserve computation formula, which requires taking specific steps regarding customer margin in their custody. In addition, the relief is conditioned on CMESC maintaining rules that calculate margin requirements and handle customer margin in a way that provides maximum protection to account holders. 

The Notice is consistent with prior guidance as to clearing margin at the FICC.