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Federal Register / Vol. 86, No. 59 / Tuesday, March 30, 2021 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6
J. Matthew DeLesDernier, Assistant Secretary.
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SECURITIES AND EXCHANGE
COMMISSION
Release No. SIPA184; File No. SIPC2021
01

Securities Investor Protection Corporation; Order Approving the Determination of the Board of Directors of the Securities Investor Protection Corporation Not to Adjust for Inflation the Standard Maximum Cash Advance Amount and Notice of the Standard Maximum Cash Advance Amount March 25, 2021.

I. Background On January 5, 2021, the Securities Investor Protection Corporation SIPC filed with the Securities and Exchange Commission Commission, under sections 9e1 and 3e2A of the Securities Investor Protection Act of 1970 SIPA,1 notification that SIPCs Board of Directors the SIPC Board had determined that the standard maximum cash advance amount available to satisfy customer claims for cash in a SIPA liquidation proceeding would remain at $250,000 beginning January 1, 2022, and for the five-year period immediately thereafter. The Commission published for comment notice of the SIPC Boards determination in the Federal Register on February 2, 2021.2 The Commission did not receive any comments. The Commission today is approving, by order, the SIPC Boards determination.
The Commission is also publishing notice that the standard maximum cash advance amount will remain $250,000
beginning January 1, 2022, and for the five-year period immediately thereafter.
The Dodd-Frank Wall Street Reform and Consumer Protection Act the Dodd-Frank Act 3 amended SIPA to 6 17

CFR 200.303a31.
U.S.C. 78fff3e1 and 15 U.S.C.
78ccce2A, respectively.
2 See Securities Investor Protection Corporation, Release No. SIPA183 Jan. 27, 2021, 86 FR 7900
Feb. 2, 2021 File No. SIPC202101. The notice sets forth SIPCs statement of the purpose and statutory basis of the determination of the SIPC
Board not to adjust the standard maximum cash advance amount for inflation, which was attached to a letter from SIPC to the Commission, dated January 5, 2021.
3 Public Law 111203, 124 Stat. 1376 July 21, 2010.

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raise the standard maximum cash advance amount from $100,000 to $250,000 per customer.4 The amendments to SIPA aligned that amount with the maximum insurance amount provided by the Federal Deposit Insurance Corporation FDIC to customers of a failed bank. The DoddFrank Act also amended SIPA to require the SIPC Board of Directors to determine, no later than January 1, 2011, and every five years thereafter, whether an inflation adjustment to the standard maximum cash advance amount available to satisfy customer claims in a SIPA liquation proceeding is appropriate.5 Any adjustment to the standard maximum cash advance amount takes effect on January 1 of the year immediately succeeding the calendar year in which the adjustment is made.6 The SIPC Boards determination on whether to make an adjustment is subject to Commission approval as provided under section 3e2 of SIPA.7 The Commission must publish notice of 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.8
II. Determination of the SIPC Board Not to Adjust the Standard Maximum Cash Advance Amount As described above, SIPC filed with the Commission notification that the SIPC Board had determined not to raise the standard maximum cash advance amount above $250,000, and thereby maintain it at that level beginning January 1, 2022, and for the five-year period immediately thereafter. In its filing, SIPC stated that applying the formula prescribed by SIPA in this 4 In a liquidation of a broker-dealer performed under SIPA, a fund of customer property is established for priority distribution to customers ahead of all other creditors. Each customer is entitled to a pro rata share of the customer property to the extent of the customers net equity in the customers account. If the amount of customer property is insufficient to satisfy a customers net equity claim, SIPC advances money to satisfy the claim up to $500,000 per customer, of which up to $250,000 i.e., the standard maximum cash advance amount can be used to satisfy a claim for cash. See 15 U.S.C. 78fff3.
5 15 U.S.C. 78fff3e1. In 2016, the Board determined to maintain the standard maximum cash advance amount at $250,000, which was approved by the Commission. See Securities Investor Protection Corporation, Release No. SIPA
174 Feb. 22, 2016, 81 FR 9561 Feb. 25, 2016 and Securities Investor Protection Corporation, Release No. SIPA176 March 30, 2016, 81 FR 19250 April 4, 2016.
6 15 U.S.C. 78fff3e4.
7 See 15 U.S.C. 78ccce2; 15 U.S.C. 78fff 3e1.
8 15 U.S.C. 78fff3e3A.

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instance would have increased the standard maximum cash advance amount by $40,000 and that the SIPC
Board weighed the factors it considered in making its determination against an increase of that amount. For the reasons discussed below, the SIPC Board determined not to make the inflation adjustment.
The SIPC Board is required to consider the following criteria under SIPA: 1 The overall state of the fund and the economic conditions affecting members of SIPC; 2 the potential problems affecting members of SIPC;
and 3 such other factors as the SIPC
Board may determine appropriate.9 In its filing, SIPC stated that the SIPC
Board considered the projected growth of the SIPC Fund,10 including the target amount for the SIPC Fund of $5 billion, the assessment rate imposed on SIPC
members, and the potential impact of an inflation adjustment on the SIPC Fund.
According to the filing, the Board also considered SIPCs experience with respect to: 1 SIPC advances in past and present; 2 amounts generated from assessments on member broker-dealers;
and 3 projected returns on SIPC
investments. According to the filing, based on these factors, the SIPC Board concluded that the SIPC fund is positioned to remain on a steady growth path for the foreseeable future, barring any unforeseen catastrophic event, and that any increase in the cash limit of SIPA protection would not appreciably benefit customers.
The filing states that the SIPC Board also considered the relationship between the amount of the SIPC
standard maximum cash advance amount and the standard maximum amount of protection afforded by the FDIC to customers of a failed bank, noting both the current equivalency between SIPAs maximum cash advance amount and the standard maximum deposit insurance amount that fixes the limit on bank deposit insurance under the Federal Deposit Insurance Act both at $250,000, and that increases to the limit of protection for cash claims under SIPA historically have moved in lockstep with increases in FDIC deposit insurance. According to the filing, the SIPC Board concluded that an inflation adjustment to the SIPA maximum cash advance amount without a corresponding adjustment to the FDIC
standard maximum deposit insurance amount would result in an 9 15

U.S.C. 78fff3e5.
is required to establish and administer a broker-dealer liquidation fund the SIPC Fund from which all expenditures by SIPC are to be made, including funds used to facilitate the liquidation of broker-dealers. See 15 U.S.C. 78ddd.
10 SIPC

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