Series 26: Customer Reserve Bank Account

Customer Reserve Bank Account

In addition to making sure that broker-dealers keep customers’ securities in their possession or control, broker-dealers must also keep customers’ cash and securities separate from their own proprietary trading activities. A proprietary trade occurs when the broker-dealer trades for its own accounts. To this end, the customer protection rule also requires a broker-dealer to periodically compute the amount of funds obtained from its customers or from its use of their securities (credits) and compare them to the amount the broker-dealer has lent to customers for their transactions (debits). If credits exceed debits, the broker-dealer is required to keep the difference on deposit in a “Special Reserve Bank Account for the Exclusive Benefit of Customers.” The reserve account computation must be completed at the