Solution Overview

Adopted in 1972, SEC Rule 15c3-3 provides regulatory safeguards regarding the custody and use of customer securities and free credit balances held by broker-dealers. The rule, with limited exceptions, requires compliance by all registered broker-dealers. The purpose of Rule 15c3-3 is to protect customer funds and securities held by the broker-dealer. SEC Rule 15c3-3 is composed of two distinct parts. Part 1 deals with the maintenance of the physical possession or control of all fully paid and excess margin customer securities. The second part requires broker-dealers to segregate all customer cash or money obtained from the use of customer property that has not been used to finance transactions of other customers. Our solution deals primarily with the second part of the rule. It is designed to provide a fundamental rule based allocation and calculation that will greatly assist the Broker Dealer in determining what amount of cash and securities must be ‘locked up’ for the benefit of its customers. We also provide for the adjustment of the reserve formula to reflect references from the possession and control section of the rule.

The solution supports the weekly and month end computations that are required. Broker-dealers may perform this computation as of the close of any day or on demand. The Rule SEC 15c3-3 solution includes 2 modules:

1. Module Customer Reserve – Provides a calculation for the Broker Dealer’s customer accounts.
2. Module PAIB (Proprietary Account of Introducing Broker) – Provides a calculation for the Broker Dealer’s accounts of Introducing Brokers.

The AxiomSL solution for Rule 15c3-3 also supports the calculation to be run ‘on demand’ as new data is available and introduced into the solution through the client interface. This solution will include a customizable web based dashboard feature, which is a tool that provides simplified views into results of the calculation and supports high level review and approval features for business users.