SEC 15c3-3 Solution For Customer Protection

An SEC 15c3-3 ecosystem to perform allocations and calculations to determine customer protection lock-ups and interoperate with SEC Rule 15c3-1 and FOCUS Reports

Overview


Device Frame
Customer Protection

SEC 15c3-3 provides regulatory safeguards regarding the custody and use of customer funds and securities held by broker-dealers. With certain exceptions, the rule requires all registered broker-dealers to comply.

Specifically, the second part of the rule requires firms to determine the amount of funds that must be deposited into special reserve bank accounts in the event funds due to customers exceed those due from customers. The same applies to the proprietary accounts of brokers.

Challenges

  • Execute daily, weekly, or monthly calculations
  • Lack of automation

  • Complex data management
  • Disparate data sources

Questions to Consider

  • Do we have a plan to eliminate the manual processes upon which we currently rely for calculation and reporting?
  • Are we confident that we can correctly incorporate rule-changes into our current calculation engine?
  • Do we have transparency into our data and calculations at a granular level?
  • Does our technology enable us to efficiently ingest and process large data sets?

  • Are we prepared for heightened regulatory scrutiny of our data, calculation, and reporting processes?
  • Are we satisfied that our overall data management and governance capabilities meet regulatory expectations?
  • Are we confident that we have established repeatable processes that withstand examination?

Solution

Automated, Transparent Ecosystem for Broker-Dealer Reporting

AxiomSL’s end-to-end solution on ControllerView for SEC 15c3-3 provides the rule-based allocations and calculations that enable firms to determine the amount of cash and/or securities that must be locked up for the benefit of its customers and other broker-dealers.

Deployable on-premises or via AxiomSL’s RegCloud offering, the solution interoperates with SEC 15c3-1 and with FOCUS Reports.

Two Lock-Up Calculation Modules

  • Proprietary accounts of brokers (PAB) module ― Provides a calculation for the accounts of other broker-dealers

  • Customer reserve module ― Provides a calculation for the broker-dealer’s customer accounts

Powered by BrokerView, An Extensible Data Dictionary

  • BrokerView enables firms to introduce native data into ControllerView once ― and then use the data multiple times across many required calculations

  • BrokerView data feeds into Supplemental Reports and net capital calculations

Capabilities

  • Comparison and versioning functionality enables users to determine drivers of variances (day-over-day, day-over-prior month, etc.)
  • Natively ingests and integrates data from firm’s stock record and general ledger
  • Supports allocation of debit items against identified credit items in the formula in accordance with rules
  • Enables adjustments to incoming data and allows for re-allocations

  • Calculates amounts required to be deposited in customer and broker special reserve bank accounts
  • Integrated workflow enables users to easily initiate processing, manually or via a scheduler
  • Complete drill-down visibility into underlying report components
  • Allocation logic configurable by the client

Integrated Output

Produces seven submission files to comply with FINRA’s AEP XML schema:

  • Full Stock Record
  • Chart of Accounts
  • Allocation Categories
  • Allocation Hierarchy

  • Allocation Category Summary
  • Allocation Pair Off Summary
  • Security Allocation Details

Device Frame

Transparent Allocation and Calculation Engine

An innovative, transparent ecosystem for broker-dealer regulatory reporting powered By BrokerView, an extensible data dictionary.

AxiomSL - Transparent Allocation and Calculation Engine for SEC 15c3-3 to determine customer protection lock-ups

Click image to view at full size

To learn more, download the U.S. Broker-Dealer Solutions brochure

Benefits

With BrokerView extensible data dictionary architecture, firms can implement once and then report against SEC 15c3-1, SEC 15c3-3, FOCUS reporting, and other broker-dealer regulatory requirements

End-to-end process automation removes manual process risks and establishes efficiency and auditability

RegCloud deployment reduces regulatory infrastructure TCO (total cost of ownership)

Transparent functionality enables astute management of customer protection calculations and related regulatory reporting

Transparent data and lock-up calculations enable firms to create a regulatory-compliant customer reserve and strengthen their processes

Flexible, modular architecture enables clients to align implementation with regulatory reporting strategy

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