4.2.1. Physical Possession or Control
Rule 15c3-3 requires broker-dealers to promptly obtain and maintain in their possession or control all of their customers’ fully paid and excess margin securities. This number must be determined daily. Should the broker-dealer find itself in a deficit position, that is, to the extent its customers’ securities are not in its possession or control, it must initiate action to eliminate that deficit.
Possession means that the securities are physically located at the broker-dealer’s. Control means securities are located at an approved location, free of charge or claim of any kind. Approved locations include clearing firms, banks, omnibus credit accounts at another broker-dealer, and SEC-approved foreign depositories. Securities that are in transfer to another broker-dealer or in transit between offices or are held by a subsidiary of the broker-dealer are also deemed to be in its control.
The requirement to have possession or control does not apply to temporary lags in obtaining p
