On September 17, 2026, the Staff of the Division of Trading and Markets (the “Division”) of the Securities and Exchange Commission (the “SEC”) issued two no-action letters addressing the net capital and customer protection implications of “zero cash balance” brokerage account models. The letters were issued to eToro USA Securities Inc. (“eToro”), an introducing broker, and Alpaca Securities LLC (“Alpaca”), a carrying/clearing firm. Each seeks to offer a “zero cash balance” brokerage account in addition to its traditional brokerage account offerings.
Link to How the “zero cash balance” model works How the “zero cash balance” model works
Under the zero cash balance model described in the letters, brokerage customers choose not to deposit and maintain their funds in their brokerage accounts, but instead in external accounts maintained either by a state-licensed money services business registered with the Financial Crimes Enforcement Network (an “MSB”) or by a bank (each, an “External Cash Account”). When a customer places a securities buy order, the customer instructs the MSB or bank to transfer funds from the customer’s External Cash Account to the customer’s brokerage account at the carrying firm. When a customer sells securities, the carrying firm, in accordance with the customer’s standing authorization, promptly transfers the cash proceeds from the customer’s brokerage account to the customer’s External Cash Account. Customers do not directly fund or otherwise maintain funds in their brokerage accounts.
The two letters address different regulatory aspects of this model, reflecting the different roles of the firms:
Link to The eToro Letter – Net Capital Treatment under SEC Rule 15c3-1 The eToro Letter – Net Capital Treatment under SEC Rule 15c3-1
eToro operates as an introducing broker-dealer that seeks to introduce zero cash balance brokerage accounts to its carrying broker-dealer on a fully disclosed basis. The carrying broker-dealer carries all of eToro’s customer brokerage accounts and is responsible for all books and records pertaining to those accounts as is customary of a clearing broker-dealer. eToro does not receive, directly or indirectly, hold funds or securities for, or owe funds or securities to, customers, does not carry customer accounts, and does not engage in any of the activities described in paragraphs (a)(2)(i) through (v) of SEC Rule 15c3-1. The Staff stated that it will not recommend enforcement action against eToro under Section 15(c)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) or Rule 15c3-1(a) thereunder if eToro operates the zero cash balance model while maintaining a minimum net capital of the greater of $5,000 or the amount required under SEC Rule 15c3-1(a)(1), subject to the conditions detailed in the request letter, as outlined below under Common Principles.