SEC Releases FAQs Related to U.S. Treasury Security Clearing Requirements

The staff in the SEC’s Division of Trading and Markets has released responses to FAQs “that broker-dealers have posed to the staff regarding rule amendments to the customer protection rule related to the clearing of U.S. Treasury securities.” Topics covered in the FAQs include:

• Application of customer reserve formulas related to cleared U.S. Treasury securities.
• Credits in customer reserve formulas related to an Item 15 debit.
• Prefunding customer margin requirements with cash or U.S. Treasury securities owned by a broker-dealer.
• Use of customers’ securities to meet a margin requirement.
• Excess margin collateral.
• Mark-to-market or variation margin payments.
• Customers who borrow against other customer collateral to meet a qualified clearing agency’s margin requirement.
• PAB account holders and the PAB reserve formula.

For more information, see the press release on the SEC’s Web site.