SIE practice questionmediumCustomer Protection Rule
SEC Rule 15c3-3 (the customer protection rule) requires broker-dealers to:
- AGuarantee customer accounts against market losses
- BSegregate customer securities and funds from the firm's proprietary assets✓ Correct answer
- CProvide monthly portfolio performance reports
- DOffer all customers SIPC insurance
Explanation
Why B — Segregate customer securities and funds from the firm's proprietary assets
The customer protection rule (SEC Rule 15c3-3) requires broker-dealers to segregate customer funds and securities from the firm's own assets. This ensures that customer assets are protected if the firm faces financial difficulty. Firms must maintain a reserve of customer funds in a special reserve bank account. This separation is a critical investor protection — it means that a broker-dealer's financial problems should not directly impact customer assets.
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