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Federal Register / Vol. 86, No. 59 / Tuesday, March 30, 2021 / Notices
unprecedented divergence between the two.
Further, the filing avers that the SIPC
Board also considered that, of the more than 770,000 allowed claims in completed or substantially completed liquidation proceedings as of year-end 2019, the unsatisfied portion of cash claims amounted to $25 million. More than half of that amount involved only three claims. In the seven SIPA
proceedings initiated since 2010, only one cash claim remains unsatisfied.
Finally, the filing notes that the SIPC
Board also considered that customer free credit balances at brokerage firms have not increased over the last five years in line with inflation, as firms have increasingly utilized sweep programs 11 to move customer free credit balances from broker-dealers to banks. The filing also states that the SIPC Board considered views of the staffs of the Commission, the FDIC, and the Financial Industry Regulatory Authority, as reported to the SIPC staff and as further reported by the SIPC staff to the SIPC Board.
According to the filing, after considering these factors, the SIPC
Board concluded that, on balance, an adjustment to the standard maximum cash advance amount was not appropriate, and determined that the standard maximum cash advance amount should remain at $250,000 per customer.
III. Discussion and Commission Order Section 3e2A of SIPA provides that the SIPC Board must file with the Commission any proposed amendment to a SIPC Rule.12 Section 3e2B of SIPA provides that within thirty-five days of the date of publication of the notice of filing of a proposed rule change in the Federal Register, or within such longer period 1 as the Commission may designate of not more than ninety days after such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or 2 as to which SIPC
consents, the Commission shall: i By order approve such proposed rule change, or ii institute proceedings to determine whether such proposed rule change should be disapproved. Further, section 3e2D of SIPA provides that the Commission shall approve a jbell on DSKJLSW7X2PROD with NOTICES

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sweep program is a service proved by a broker-dealer where it offers to its customer the option to automatically transfer free credit balances of cash in the securities account of the customer to either a money market fund product as described in Rule 2a7 under the Investment Company Act of 1940 or an account at a bank whose deposits are insured by the FDIC. See 17 CFR 240.15c33a17.
12 15 U.S.C. 78ccce2A.

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proposed rule change if it finds that the proposed rule change is in the public interest and is consistent with the purposes of SIPA.13 The SIPC Boards determination to not adjust the standard maximum cash advance amount is subject to the approval of the Commission as provided under section 3e2 of SIPA.14
The Commission finds, pursuant to section 3e2D of SIPA, that the determination of the SIPC Board not to adjust for inflation the standard maximum cash advance amount of $250,000 beginning January 1, 2022, and for the five-year period immediately thereafter is in the public interest and consistent with the purposes of SIPA.
The Commission believes that maintaining the amount at $250,000 at this time, which keeps it aligned with the maximum amount of insurance provided by the FDIC, is in the public interest and consistent with the purposes of SIPA. Specifically, there could be unintended consequences resulting from raising the amount to a level that is higher than the maximum FDIC insurance amount, such as incentivizing investors to move additional funds to their brokerage accounts from bank accounts. Providing a higher level of SIPA coverage for cash deposits of broker-dealer customers could incentivize customers to deposit cash at broker-dealers for the purpose of holding cash at the broker-dealer, as opposed depositing the cash there for an investment purpose. This practice could raise questions about whether such deposits would be covered under SIPA, which provides customer status to those cash depositors who have made the deposit with a SIPC member brokerdealer for the purpose of purchasing securities.15 By maintaining the standard maximum cash advance amount at $250,000 and in line with the maximum FDIC insurance amount, the Commission believes that the incentive for a customer to use the broker-dealer account for the purpose of holding cash, as opposed to for the purpose of purchasing securities, will be less likely to arise, thereby minimizing the instances of such deposits not being covered under SIPA, which the Commission believes is in the public interest and consistent with the purposes of SIPA.
In addition, the Commission believes that the SIPC Boards consideration of its historical experience with advances and assessments and of the potential U.S.C. 78ccce2D.
15 U.S.C. 78fff3e1.
15 See 15 U.S.C. 78lll2Bi Defining customer under SIPA.

effect of any inflation adjustment on the SIPC Fund was a reasonable method for the SIPC Board to project potential future obligations owed to customers with claims for cash recognized under SIPA when the SIPC Board considered whether to raise the standard maximum cash advance amount. The Commission believes that this approach does not materially affect the customers of SIPC
members and should minimize the potential for unnecessary increases to assessments on members and therefore is consistent with the public interest and consistent with the purposes of SIPA. Specifically, the Commission believes that maintaining the standard maximum cash advance amount at $250,000 is consistent with the public interest and with the purposes of SIPA
in light of the statistics considered by the SIPC Board that indicated that customer claims for cash have been historically satisfied in full and the trend that customer credit balances at broker-dealers have not increased in recent years.
It is therefore ordered, pursuant to section 3e2 of SIPA, that the determination by the SIPC Board that the standard maximum cash advance amount will remain at $250,000
beginning January 1, 2022, and for the five-year period immediately thereafter, be and hereby is approved.
IV. Notice of the Standard Maximum Cash Advance Amount Section 9e3A of SIPA requires that the Commission publish the standard maximum cash advance amount in the Federal Register no later than April 5 of any calendar year in which SIPC is required to determine whether an inflation adjustment is appropriate.16 Accordingly, pursuant to section 9e3A of SIPA, the Commission is hereby providing notice that the standard maximum cash advance amount is $250,000 beginning January 1, 2022, and for the five-year period immediately thereafter.
By the Commission.
J. Matthew DeLesDernier, Assistant Secretary.
FR Doc. 202106493 Filed 32921; 8:45 am BILLING CODE 801101P

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