On June 24, 2026, the Securities Industry and Financial Markets Association (“SIFMA”), a trade association for broker-dealers, investment banks, and asset managers operating in the U.S. and global capital markets, filed an application with the Securities and Exchange Commission (“Commission”), to obtain an exemption pursuant to section 36 ^[1] of the Securities Exchange Act of 1934 (“Exchange Act”),^[2] in accordance with the procedures set forth in Exchange Act Rule 0-12.^[3] Specifically, SIFMA is requesting relief, on behalf of its broker-dealer members, from the application of Exchange Act section 15(c)(3) ^[4] and Rule 15c3-3a, Note H(b)(1) and (2)(i) thereunder, to permit broker-dealers to include a debit in their reserve computations for customers and the proprietary securities accounts of other broker-dealers (“PAB”) ^[5] (collectively “reserve computations”) for margin required and on deposit with a qualified clearing agency resulting from transactions in U.S. Treasury securities in customer accounts that have been cleared, settled, and novated by the clearing agency in cases where the broker-dealer has delivered the margin collateral on a net, omnibus, basis, rather than on a gross, customer-by-customer basis, subject to certain conditions discussed below.^[6] The Commission is publishing this notice to provide interested persons with an opportunity to comment.

I. Background

Rule 15c3-3 under the Exchange Act, known as the broker-dealer customer protection rule, requires broker-dealers that hold customer cash and securities (“carrying broker-dealers”) to treat these assets in a manner that facilitates their prompt return to customers if the broker-dealer fails financially.^[7] To meet this objective, Rule 15c3-3 requires a carrying broker-dealer to take two primary steps to safeguard customer assets, which are designed to protect customers by segregating their securities and cash from the carrying broker-dealer's proprietary business activities.^[8] The first step requires a carrying broker-dealer to maintain physical possession or control over customers' fully paid and excess margin securities.^[9] The second step requires that a carrying broker-dealer maintain a reserve bank account that must hold cash or qualified securities ( e.g., U.S. Treasury securities) in an amount determined by a computation of the net cash owed to the carrying broker-dealer's customers pursuant to a formula set forth in Exchange Act Rule 15c3-3a, the customer reserve computation.^[10]

Under the customer reserve computation, the broker-dealer adds up customer credit items (for example, credit balances in customer securities accounts and cash obtained through the use of customer margin securities) and subtracts customer debit items (for example, margin loans). The goal of Rule 15c3-3 is to place a broker-dealer in a position where it is able to wind down in an orderly self-liquidation without the need of financial assistance provided by the Securities Investor Protection Corporation through a formal proceeding under the Securities Investor Protection Act of 1970.^[11]

On December 13, 2023, the Commission adopted rules under the Exchange Act to amend the standards applicable to certain clearing agencies to enhance risk management practices for central counterparties in the U.S. Treasury market and facilitate additional clearing of U.S. Treasury securities.^[12] Included in the Treasury Clearing Adopting Release, the Commission also adopted amendments to Rule 15c3-3a to permit margin required and on deposit at qualified clearing agencies providing central counterparty services for U.S. Treasury securities to be included by broker- ( printed page 48202) dealers as a debit in their customer reserve computation, subject to certain conditions.^[13]

Included among these conditions is paragraph (b)(1) to Note H, which requires that in order to include a debit in Item 15 of its customer reserve computation, a broker-dealer must deliver customer cash, U.S. Treasury securities, or qualified customer securities ^[14] to a qualified clearing agency on a customer-by-customer basis, or otherwise temporarily prefund a specific customer's margin requirement with proprietary U.S. Treasury securities, subject to certain conditions.^[15] Another condition, in paragraph (b)(2)(i) of Note H, requires that any customer margin required and on deposit at the qualified clearing agency is treated in accordance with rules requiring the qualified clearing agency to calculate a separate margin amount for each customer of the broker-dealer, and the broker-dealer to deliver that amount of margin for each customer on a gross basis.^[16] The Commission adopted this requirement to ensure that the risk of one customer's positions could not be offset by the risk of another customer's positions in determining the amount of customer margin the broker-dealer would need to have on deposit at the qualified clearing agency.^[17] Thus, under existing Note H requirements, a broker-dealer is not permitted to deliver assets belonging to one customer to meet the margin requirement of another customer, and margin must be calculated and delivered on a gross basis.^[18]

II. Summary of the Application and Proposed Conditions

In the Application, SIFMA requests that, pursuant to section 36 of the Exchange Act, the Commission grant exemptive relief from section 15(c)(3) of the Exchange Act and Rule 15c3-3a, Note H(b)(1) and (2)(i) thereunder to permit broker-dealers to include a debit in their reserve computations for customer margin required and on deposit with a qualified clearing agency resulting from transactions in U.S. Treasury securities in customer accounts that have been cleared, settled, and novated by the clearing agency, in cases where the broker-dealer has delivered the margin collateral on a net, omnibus, basis, rather than on a gross, customer-by-customer basis, subject to certain conditions.^[19]

In its Application, SIFMA stated that as broker-dealers have commenced implementing the operational and system changes necessary to comply with the gross ( i.e., customer-by-customer) margin calculation and posting requirements connected with Note H, it has become apparent that such an approach entails more significant drawbacks than anticipated at the time of the Commission's proposal and subsequent adoption of Note H. In particular, SIFMA stated in the Application that a strict customer-by-customer framework requires highly granular systems to map positions, margin requirements, and collateral flows to individual customers across clearing, settlement, and internal records, as well as complex intraday reconciliation and enhanced data infrastructure that SIFMA stated is not aligned with the existing omnibus-based operational models used in Treasury intermediation.

Further, SIFMA stated that customer-by-customer gross margining and collateral delivery requirements applied within the evolving U.S. Treasury clearing model become increasingly difficult to scale as clearing expands to a broader set of market participants and intermediated relationships, and may introduce significant operational complexity and capital inefficiencies.^[20] SIFMA additionally stated that these inefficiencies and operational complexities associated with a gross margin calculation and delivery requirement may impair broker-dealers' ability to efficiently intermediate access to centrally cleared U.S. Treasury markets, particularly for smaller or indirect participants, and may therefore undermine the Commission's objective of broadening participation in central clearing. In its Application, SIFMA stated that for broker-dealers that elect not to implement the full systems and processes necessary to support scalable gross, customer-level margining, the resulting reserve computation treatment may not reflect the economic substance of customer facilitation activity in U.S. Treasury clearing, instead giving rise to duplicative capital and liquidity requirements that are misaligned with actual risk exposure and the manner in which broker-dealers intermediate customer access to central clearing.^[21]

In its Application, SIFMA stated that one well-established model for facilitating omnibus-based intermediary clearing activity is the customer clearing structure used by the OCC.^[22] Specifically, SIFMA stated that under the OCC framework, broker-dealer clearing members intermediate customer access to centrally cleared markets through omnibus customer ( printed page 48203) accounts, with margin and risk managed at the clearing member level in a manner that promotes operational efficiency while preserving strict customer protection standards, including segregation of customer assets and strong default management protections.^[23] SIFMA requests in its Application that the Commission provide exemptive relief to permit either (1) the calculation and delivery of customer margin on a net ( i.e., omnibus) basis; or (2) the calculation of margin on a gross ( i.e., customer-by-customer) basis and the delivery of margin on a net ( i.e., omnibus) basis.^[24]

SIFMA stated in the Application that this relief would enable broker-dealers to more efficiently intermediate access to centrally cleared U.S. Treasury markets, while remaining consistent with the customer protection and reserve computation framework under Rule 15c3-3.^[25] SIFMA has further stated that the current customer-by-customer, gross margining and delivery requirement may impose disproportionate capital and operational burdens when broker-dealers serve smaller customers, particularly given applicable minimum cash margin requirements. SIFMA stated that the requested relief would provide broker-dealers with greater flexibility and alleviate these constraints, thereby supporting broader market access, enhancing liquidity, and advancing the Commission's objective of promoting a deep, resilient, and inclusive U.S. Treasury market.^[26] Additionally, SIFMA stated that this approach would take into account the various customer account types that clearing agencies currently offer to market participants for clearing transactions in U.S. Treasury securities, and as such, would help facilitate a smoother implementation of the Commission's 2023 amendments from the Treasury Clearing Adopting Release.^[27]

Further, SIFMA stated in the Application that the proposed “lesser of” framework (which is found within the proposed conditions for the requested relief, as discussed further below), reflects a conservative approach that ties the debit treatment directly to actual customer-related exposures to prevent any overstatement of debits, and preserve the integrity of the broker-dealer's customer reserve computation.^[28] More specifically, SIFMA stated in its Application that each of the three caps reflected within the proposed “lesser of” framework serves a distinct risk-limiting function: (i) the customer margin collected cap limits recognition to customer-derived funds; (ii) the margin delivered cap confines limits recognition to amounts actually transferred to the qualified clearing agency; and (iii) the qualified clearing agency margin requirement cap ensures that any margin collected or posted in excess of the clearing agency's required customer margin amount is not recognized in the customer reserve computation and is effectively “pulled back” by the broker-dealer.^[29]

SIFMA proposes certain conditions in the Application in support of its request for exemptive relief from certain conditions of Rule 15c3-3a, Note H.^[30] Specifically, SIFMA proposes that:

1. Eligibility Limitation: The relief applies solely to margin required and on deposit with a qualified clearing agency in connection with the following types of transactions in U.S. Treasury securities in customer accounts that have been cleared, settled, and novated by the qualified clearing agency: (i) purchases and sales of U.S. Treasury securities; and (ii) repurchase and reverse repurchase agreements in U.S. Treasury securities.

2. The broker-dealer delivers the following cash and securities to the qualified clearing agency to meet the customer margin requirement:

(i) Proprietary or customer cash;

(ii) Proprietary or customer U.S. Treasury securities;

(iii) Qualified customer securities; or

(iv) Any combination of clauses (i) through (iii) above.

3. Permitted Debit: The amount the broker-dealer includes in the Item 15 debit in the customer reserve computation must equal the lesser of:

(i) The amount of margin collected from customers in connection with U.S. Treasury securities transactions of the broker-dealer's customers that are cleared, settled, and novated by the qualified clearing agency;

(ii) The amount of margin required for U.S. Treasury securities positions of the broker-dealer's customers that are cleared, settled, and novated by the qualified clearing agency; or

(iii) The total of: (A) customer cash, (B) customer U.S. Treasury securities, and (C) qualified customer securities, delivered by the broker-dealer to the qualified clearing agency to meet margin requirements arising from U.S. Treasury securities positions of the broker-dealer's customers that are cleared, settled and novated by the qualified clearing agency.

4. Documentation: The broker-dealer must maintain books and records sufficient to identify the amount of customer margin collected and delivered to the qualified clearing agency.

5. Qualified Clearing Agency Rulebook Amendments: The rules of the qualified clearing agency must comply with the conditions of any exemptive order the Commission may issue in response to the Application.

6. Procedures: The broker-dealer must adopt and implement written policies and procedures reasonably designed to ensure ongoing compliance with the conditions of any exemptive order the Commission may issue in response to the Application.

7. To the extent a broker-dealer delivers margin to a qualified clearing agency pursuant to the Application, such margin remains subject to the other applicable conditions of Note H not exempted by the Commission pursuant to the Application, including paragraphs (b)(2)(ii) through (v).

Finally, SIFMA requested that the relief in any exemptive order the Commission may issue pursuant to its Application provide broker-dealers with the same relief as to their PAB account holders and PAB reserve computation under Rule 15c3-3a, subject to the same conditions as those proposed above to the customer reserve computation.^[31]

III. Request for Comment

We request and encourage any interested person to submit comments regarding the Application, including whether the Commission should grant the request. In particular, we solicit comment on the following questions:

1. Do commenters agree with SIFMA's reasons described in the Application ^[32] in support of the Commission finding that the exemptive relief is consistent with section 36 of the Exchange Act? If so, why or why not.

2. Are there other or alternative conditions not outlined in the Application, or modifications to the conditions proposed ( printed page 48204) within the Application, that the Commission should consider? If so, please describe those conditions or modifications.

3. In connection with proposed condition (i) under “Permitted Debit” above,^[33] are broker-dealers currently capable of tracking and recording the portion of any margin required and on deposit with a qualified clearing agency that is attributable to customers in connection with transactions in U.S. Treasury securities that have been cleared, settled, and novated by the qualified clearing agency? If so, how does a broker-dealer track and record this margin? For example, do broker-dealers generally record repurchase and reverse repurchase transactions in U.S. Treasury securities in a separate securities account for each customer? If broker-dealers cannot track and record this portion of any margin required and on deposit with a qualified clearing agency that is attributable to customers in connection with transactions in U.S. Treasury securities that have been cleared, settled, and novated by the qualified clearing agency, will they need to modify their current operational systems to comply with the conditions proposed in this Application? If so, how?

4. Does the relief proposed in the Application to permit broker-dealers to include a debit in their reserve computations for margin required and on deposit with a qualified clearing agency resulting from transactions in U.S. Treasury securities that have been cleared, settled, and novated by the qualified clearing agency, when the broker-dealer has delivered the margin collateral on a net, omnibus, basis, rather than a gross, customer-by-customer, basis raise any potential customer protection concerns or risks? ^[34] If so, please describe. What modifications to the proposed conditions, or additional conditions, if any, should the Commission consider to address any potential risks posed by the requested relief?

5. Is the relief requested in the Application more relevant to a particular type of U.S. Treasury securities transaction ( e.g., cash U.S. Treasury securities transactions or U.S. Treasury securities repurchase and reverse repurchase agreements, etc.)? If so, how?

6. What are the operational issues, if any, that broker-dealers face that stem from the existing requirements to calculate and deliver margin on a gross, customer-by-customer basis, as required by Rule 15c3-3a, Note H? How would the relief requested in the Application address these issues?

7. Do commenters agree with SIFMA that the gross, customer-by-customer margin requirement approach causes disproportionate capital and operational constraints that may result in duplicative capital and liquidity requirements? If so, would the exemptive relief proposed in the Application relieve those constraints? If so, how?

8. How much time would be necessary, and what steps would be needed, for qualified clearing agencies to modify their own rulebooks and systems to be able to conduct operations consistent with the exemptive relief requested in the Application?

9. In considering whether to issue an exemptive order requested in the Application, should the Commission also consider clarifying the application of any Notice H notices issued or that the Commission may issue under paragraph (b)(3) under Rule 15c3-3a, Note H, as they relate to the proposed conditions in the Application? If so, how?

10. Would the exemption requested in the Application have a competitive impact—either positive or negative—on broker-dealers and their customers in the context of clearing for U.S. Treasury securities? What would be the potential benefits and costs of this exemptive relief? Would the exemption and conditions impact investor protection? If so, what would those impacts be?

Comments should be received on or before August 31, 2026. Comments may be submitted by any of the following methods:

Electronic Comments

• Use the Commission's internet comment form (https://www.sec.gov/​comments/​s7-2026-26/​notice-application-securities-industry-financial-markets-association-exemption-pursuant-section-36); or
• Send an email torule-comments@sec.gov. Please include File Number S7-2026-26 on the subject line.

Paper Comments

• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number S7-2026-26. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method of submission. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/​rules-regulations/​public-comments/​s7-2026-26). Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection.

For further information, you may contact Raymond A. Lombardo, Acting Associate Director; Sheila Dombal Swartz, Senior Special Counsel; or James Wintering, Special Counsel at (202) 551-5500, Office of Broker-Dealer Finances, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-7010.