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U.S. SEC Extends Compliance Deadline for Recent Amendments to the Customer Protection Rule

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On June 25, 2025, the U.S. Securities and Exchange Commission (SEC) voted to extend the compliance deadline for recent amendments...

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On June 25, 2025, the U.S. Securities and Exchange Commission (SEC) voted to extend the compliance deadline for recent amendments to Exchange Act Rule 15c3-3 (the “Customer Protection Rule”) to June 30, 2026.<a href="#_ftn1" target="_self">[1]</a> The amendments, adopted on December 20, 2024,<a href="#_ftn2" target="_self">[2]</a> increase the frequency of required reserve computations for carrying broker-dealers from weekly to daily. The original compliance deadline had been set for December 31, 2025.<h4>Recent Amendments</h4>The Customer Protection Rule “requires broker-dealers that maintain custody of customer securities and cash (‘Carrying Broker-Dealers’) to have a special reserve account at a bank that must hold cash and/or qualified securities in an amount determined by a computation of the net cash owed to the carrying broker-dealer’s customers.”<a href="#_ftn3" target="_self">[3]</a> Carrying Broker-Dealers were previously required to make this computation and any necessary deposits to the special reserve account on a weekly basis. The recent amendments, however, require broker-dealers maintaining average total credits equal to or greater than $500 million to perform reserve computations and corresponding deposits daily.The recent amendments also modify Rule 15c3-1 (the “Broker-Dealer Net Capital Rule”), in connection with the Customer Protection Rule, to permit Carrying Broker-Dealers that “perform daily customer reserve computation[s] to decrease the required 3 percent ‘buffer’ in the [special reserve account] by reducing the customer-related receivables, or ‘aggregate debit items,’ charge from 3 percent to 2 percent in the computation.”<a href="#_ftn4" target="_self">[4]</a><h4>SEC Chairman Atkins’ Response</h4>Regarding the extension, SEC Chairman Paul S. Atkins remarked, “by extending this compliance date, [the SEC is] giving broker-dealers additional time to implement daily computation under Rule 15c3-3,” and “to avoid operational challenges [associated] with meeting the initial compliance date.”<hr class="divider"><a href="#_ftnref1" target="_self">[1]</a> See <a href="https://www.sec.gov/newsroom/press-releases/2025-95-sec-extends-compliance-date-help-broker-dealers-fully-test-implement-daily-reserve-computation?utm_medium=email&utm_source=govdelivery" target="_blank">SEC Extends Compliance Date to Help Broker-Dealers Fully Test and Implement Daily Reserve Computation Requirement</a> (June 25, 2025).  <a href="#_ftnref2" target="_self">[2]</a> See <a href="https://www.sec.gov/newsroom/press-releases/2024-211" target="_blank">SEC Adopts Rule Amendments to the Broker-Dealer Customer Protection Rule</a> (Dec. 20, 2024).  <a href="#_ftnref3" target="_self">[3]</a> See <a href="https://www.sec.gov/files/34-102022-fact-sheet.pdf" target="_blank">Enhancements to the Broker-Dealer Customer Protection Rule</a> (Dec. 20, 2024).  <a href="#_ftnref4" target="_self">[4]</a> See SEC Adopts Rule Amendments to the Broker-Dealer Customer Protection Rule, <a href="https://www.sec.gov/newsroom/press-releases/2024-211" target="_blank">footnote 2</a>.

U.S. SEC Extends Compliance Deadline for Recent Amendments to the Customer Protection Rule

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Val Dahiya is a partner in the firm’s Broker-Dealer Compliance + Regulation and Capital Markets practice groups, Co-Head of its Securities + Derivatives Regulatory Solutions team, and Co-Lead of the firm’s Digital Assets practice within the Fintech Group.Val advises financial services clients on complex compliance, regulatory, and transactional matters arising under U.S. Securities and Exchange Commission (SEC) and Financial Institution Regulatory (FINRA) jurisdiction. She has nearly two decades of experience in advising on securities market infrastructure, including over 10 years of work history at the SEC and three years at FINRA.<h4 dir="ltr">Professional Experience: SEC and FINRA </h4>Prior to joining Morrison Foerster, Val chaired the securities trading and markets practice and served as office managing partner at another international law firm. Before that, she served as the Washington, D.C. Branch Chief in the Office of Trading Practices in the Division of Trading and Markets at the SEC, where she provided analysis and recommendations on complex legal and policy issues related to the securities industry, including the application of Exchange Act rules and regulations to emerging areas such as cryptocurrencies and digital assets. Val’s counsel was essential in shaping SEC policies and ensuring their consistent application across the evolving financial landscape. Prior to this, Val’s responsibilities as Special Counsel in the Division of Trading and Markets included providing essential guidance on securities regulation compliance, including the Commission’s financial integrity and regulatory programs for broker-dealers and securities exchanges. Val also worked closely with the Divisions Office of Market Supervision reviewing self-regulatory organization (SRO) rule filings. In her capacity as Attorney/Senior Counsel in the Division of Examinations, Broker-Dealer Group, Val led comprehensive examinations and inspections of broker-dealers and dually registered entities, ensuring compliance with federal securities laws and SRO rules. Her responsibilities also extended to preparing enforcement referral memoranda and assisting the Enforcement Division in complex trading cases. While at the SEC, Val also worked extensively on issues related to trading practices, including market making, ETFs, direct market or sponsored access, when-issued securities, and trading in the grey markets.Prior to her tenure at the SEC, Val worked at FINRA (formerly NASD), where she conducted reviews and investigations of broker-dealer activities, identified violations of relevant regulations, and made disciplinary recommendations. Her work at FINRA involved analyzing trading activity for irregularities and patterns indicating violative conduct.Collectively, this experience informs Val’s counsel on the highly complex regulatory issues associated with broker-dealer, transfer agent, clearing agency, exchange and Alternative Trading System (ATS) operations, registration requirements, and compliance.<h4 dir="ltr">Capabilities</h4>Val also advises clients in the distributed ledger technology space that are seeking to understand the potential securities regulatory implications. Her practice ranges from product counseling all the way through to counseling on complex compliance and regulatory issues.Other areas Val is particularly well qualified to advise on include:<ul dir="ltr"><li dir="ltr">broker-dealer compliance issues relating to Regulations ATS, NMS, M, SCI, and SHO, as well Rules 15c2-11, 15c3-5, and 15c3-3;</li><li dir="ltr">Regulation BI and standard of care issues;</li><li dir="ltr">books-and-records requirements;</li><li dir="ltr">large trader and position reporting;</li><li dir="ltr">forex trading;</li><li dir="ltr">market access and other electronic trading issues;</li><li dir="ltr">information barriers and insider trading;</li><li dir="ltr">soft dollars and commission sharing arrangements;</li><li dir="ltr">the net capital and customer protection rules; and</li><li dir="ltr">cybersecurity and data protection issues.</li></ul><h4 dir="ltr">Leadership</h4>Val is a member of the Nasdaq Exchange Review Council for each of Nasdaq’s six exchanges. Prior to joining Morrison Foerster, Val served as office managing partner at another international law firm.

Val Dahiya

Co-Head of Securities + Derivatives Regulatory Solutions

Sydney Stancik is a Capital Markets associate in the firm’s Washington, D.C. office, where she represents both issuers and underwriters in securities offerings, including initial public offerings, follow-on offerings, and private placements. In addition, Sydney advises public company clients regarding compliance with the U.S. federal securities laws and the requirements of the New York Stock Exchange and Nasdaq. Sydney also represents public and private companies on a variety of general corporate governance matters.Sydney received her J.D. from the Georgetown University Law Center. While in law school, she interned for the U.S. Securities and Exchange Commission in the Division of Corporation Finance and in-house for a large public company.Sydney received her M.A. from Sciences Po in Paris, France, and her B.S. from the University of Illinois at Urbana-Champaign.Prior to law school, Sydney worked for the American Bar Association.