Series 27: Customer Reserve Bank Account

Customer Reserve Bank Account

The customer protection rule requires a broker-dealer to periodically compute the amount of funds in its customers’ accounts obtained from the customer or from its use of customers’ securities (credits) and compare them to the amount the broker-dealer has lent to customers for the customers’ transactions (debits). If credits exceed debits, the broker-dealer is required to keep the difference on deposit in a “Special Reserve Account for the Exclusive Benefit of Customers.”

The computation to determine how much funds are needed in a customer reserve bank account must occur weekly, for most broker-dealers at the close of the last business day of the week. Any required deposits into the account must be made no later than one hour after the opening of banking business on the second following business day. If debits exceed credits, the firm, in theory, is not using customer money to conduct its own business, and therefore, no money need be deposited in the account.

The only acceptable deposits into the customer reserve bank account are cash and qualified securities, which are securities issued or guaranteed by the