SEC issues interpretive relief on Rule 15c3-3
31 March 2026 US
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The US Securities and Exchange Commission’s (SEC’s) Division of Trading and Markets has acted on a joint request submitted by the International Securities Lending Association (ISLA) Americas and the Securities Industry and Financial Markets Association (SIFMA) for an exemptive order and interpretive relief regarding the application of Rule 15c3-3 (Customer Protection Rule) under the Securities Exchange Act of 1934.
In the new exemptive order, the SEC allows broker-dealers to pledge baskets of liquid equity securities as collateral when borrowing equity securities from customers under a ‘fully-paid borrow’.
According to ISLA Americas, in the accompanying letter addressed to them and SIFMA, the SEC confirmed that it will not recommend enforcement action if a broker-dealer pledging customer margin equity securities as collateral for equity securities borrowed to cover customer short sales or to make delivery on customer fails to deliver includes a debit under the Customer Reserve Formula for the market value of such equity securities borrowed, subject to the conditions outlined in the staff’s response.
The request, developed through close coordination between ISLA Americas, SIFMA, and their respective members, was submitted to permit a more efficient and transparent structure for equity borrowing under existing interpretations of Rule 15c3-3.
The relief is expected to significantly reduce operational complexity and counterparty exposures during times of market volatility, while providing beneficial owners and agent lenders with an additional and important risk management tool for their securities lending programmes.
Fran Garritt, CEO, ISLA Americas states: “This outcome reflects the importance of coordinated industry engagement and constructive dialogue with regulators.
“It demonstrates how practical, market-informed advocacy can support resilience while remaining fully aligned with customer protection objectives.”
To support members in understanding and implementing the SEC position, ISLA Americas has published a whitepaper outlining the background to the request, the regulatory framework, and key considerations for firms across legal, operational, risk, and balance sheet functions.
In the new exemptive order, the SEC allows broker-dealers to pledge baskets of liquid equity securities as collateral when borrowing equity securities from customers under a ‘fully-paid borrow’.
According to ISLA Americas, in the accompanying letter addressed to them and SIFMA, the SEC confirmed that it will not recommend enforcement action if a broker-dealer pledging customer margin equity securities as collateral for equity securities borrowed to cover customer short sales or to make delivery on customer fails to deliver includes a debit under the Customer Reserve Formula for the market value of such equity securities borrowed, subject to the conditions outlined in the staff’s response.
The request, developed through close coordination between ISLA Americas, SIFMA, and their respective members, was submitted to permit a more efficient and transparent structure for equity borrowing under existing interpretations of Rule 15c3-3.
The relief is expected to significantly reduce operational complexity and counterparty exposures during times of market volatility, while providing beneficial owners and agent lenders with an additional and important risk management tool for their securities lending programmes.
Fran Garritt, CEO, ISLA Americas states: “This outcome reflects the importance of coordinated industry engagement and constructive dialogue with regulators.
“It demonstrates how practical, market-informed advocacy can support resilience while remaining fully aligned with customer protection objectives.”
To support members in understanding and implementing the SEC position, ISLA Americas has published a whitepaper outlining the background to the request, the regulatory framework, and key considerations for firms across legal, operational, risk, and balance sheet functions.
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