On June 29, 2026, the Financial Industry Regulatory Authority (FINRA) released an Information Notice regarding daily customer and proprietary accounts of broker-dealers (PAB) reserve computations. The notice provides targeted relief for certain “funds in motion” created by sweep programs for those firms performing daily computations.
This article explains why daily computations matter, how free credit balances and sweep activity affect reserve requirements, and how digital assets may eventually reduce these types of operational timing gaps.
FINRA Information Notice
On June 30, 2026, the compliance date took effect for carrying broker-dealers with average total credits of $500 million or more to begin performing daily customer and PAB reserve computations under SEC Rule 15c3-3. The customer reserve computation is designed to help ensure that customer cash and securities are protected and are not used by broker-dealers to finance proprietary activities.
Historically, firms were required to perform the customer reserve computation weekly and at month-end. Weekly computations were generally based on balances as of the close of business on Friday; computations prepared on Monday and funded by early Tuesday morning.
The shift from weekly to daily computations is intended to reduce the time during which customer-related liabilities may exceed the amount on deposit in the special reserve bank account. During periods of market stress or significant customer activity, large inflows from customer deposits or sell transactions can create elevated free credit balances between weekly computation dates.
A daily computation reduces that timing gap and better aligns required reserve deposits with current customer obligations. It also gives firms a more current mechanism to address reductions in customer credit, rather than waiting for the next weekly cycle or performing a special midweek computation. SEC also cited concerns that the failure of a large broker-dealer could create a shortfall between customer obligations and amounts on deposit, increasing risk to customers and the Securities Investor Protection Corporation.
Free Credit Balance Sweep Programs
Broker-dealers also reduce free credit balances through sweep programs that operate under Securities Exchange Act (SEA) Rule 15c3-3(j). In a bank deposit sweep program, customer cash is automatically transferred to one or more bank deposit accounts, where it may be eligible for FDIC insurance subject to applicable limits. In a money market fund sweep program, customer cash is automatically used to purchase money market fund shares, such as government or U.S. Department of the Treasury (Treasury) money market funds.
For example, when a customer’s bond matures, the proceeds typically post to the brokerage account as a free credit balance. The broker-dealer will sweep the free credit to a bank deposit program or money market fund, reducing the free credit balance at the broker-dealer. To manage FDIC insurance limits, broker-dealers may allocate bank sweep balances across multiple program banks.
These sweep programs provide customers with potential benefits, including FDIC insurance for eligible bank deposits or exposure to high-quality, short-term instruments through government or Treasury money market funds. They also support operational efficiency because funds can sweep back into the brokerage account when cash is needed to settle new purchases, process withdrawals, or cover other customer account activity.
From an operational perspective, securities transactions generally settle on a T+1 basis, which allows broker-dealers to forecast sweep activity. Firms typically run sweep processes once or twice per day. However, same-day deposits, withdrawals, or other late-day activity may still leave an account with a temporary free credit or debit balance on an overnight basis.
For example, if a customer sends a Fedwire deposit after the firm’s sweep process has occurred, the deposit may remain as free credit until the next business day. Conversely, if a customer requests an afternoon wire withdrawal, the account may show a temporary debit until funds sweep back into the brokerage account. Free credits expected to sweep the next business day are often referred to as “funds in motion.” Temporary debit balances expected to be covered by a next-day sweep back into the brokerage account are commonly referred to as prepayments.
Customer Reserve Treatment of Sweep Timing Differences
Debit Timing Differences: Under SEA Rule 15c3-3a, Exhibit A, Item 10, debit balances in customers’ accounts are generally included as debit items in the customer reserve formula, subject to applicable exclusions. This interpretation addresses prepayments related to redemptions of money market funds and provides that a customer debit expected to be covered by a next-day money market fund redemption should not be treated as a customer debit in the reserve formula. Instead, it should be treated as a receivable (prepayment) from the money market fund.
Staff guidance has applied similar logic to bank deposit sweep programs. As a result, regulatory reporting teams typically perform a manual adjustment to reduce customer debits for these prepayment amounts so that the reserve formula does not provide the broker-dealer with an inappropriate debit benefit.
Credit Timing Differences: FINRA’s June 29, 2026, Information Notice, issued in coordination with SEC Division of Trading and Markets staff guidance, allows a carrying broker-dealer that performs a daily customer reserve computation and offers a sweep program to reduce a required reserve deposit by the amount of certain sweep credits. The adjustment applies to credits included in the computation that are transferred to a sweep program on the business day following the “as of” date of the computation.
Firms should be able to evidence the amount of sweep credits used to reduce the deposit requirement and report the adjustment through the applicable Financial and Operational Combined Uniform Single reporting line. In practice, identifying and evidencing these credits may require additional operational and regulatory reporting procedures. Some firms may use the adjustment only for significant, identifiable sweep credits where the benefit outweighs the manual processing burden.
What We’re Watching Next
Tokenized money market funds may also offer faster transferability and same-day liquidity, depending on product design, settlement infrastructure, and regulatory permissions.
For broker-dealers to move meaningfully toward tokenized sweep products, several conditions would need to develop. Firms would need scalable operational processes, integration with custody and brokerage platforms, clear regulatory treatment, customer disclosures, and robust controls over wallet infrastructure, reconciliation, settlement, and asset protection.
Revenue considerations will also matter. Broker-dealers generate significant revenue from bank sweep programs and money market fund sweep arrangements, so tokenized alternatives would need to preserve economics, create new revenue opportunities, or deliver sufficient cost and operational savings to justify adoption.
How Forvis Mazars Can Help
Daily Rule 15c3-3 reserve computations are intended to strengthen customer protection by requiring applicable broker-dealers to segregate customer credits more promptly than under the prior weekly process. Sweep programs can reduce free credit balances by moving customer cash to bank deposit programs or money market funds. However, operational timing differences can still create temporary daily swings in free credit and debit balances.
Firms should make sure that prepayment-related debits do not improperly benefit the reserve formula and that any reduction for next-day sweep credits is properly identified, supported, and reported. The daily computation requirement, therefore, increases the importance of well-timed books and records, reliable sweep data, strong regulatory reporting controls, and clear evidence supporting manual adjustments.
Our Financial Services team at Forvis Mazars can assist you with the analysis, design, and implementation of strategic changes to your reserve computation process under SEC Rule 15c3-3. We possess the regulatory domain knowledge and industry experience that you can trust, combining a focus on delivering an Unmatched Client Experience® with the resources of a global firm.
We work closely with financial institution clients to provide a range of services from guidance on applying the debit items charge and documenting test computations, to advice on integrating daily customer and PAB reserve requirements into your operating model. Our professionals serve companies in the financial services industry on leading projects, and we look forward to helping your organization achieve its goals.
If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.