What is the customer protection rule?

Created by the Securities and Exchange Commission is a rule of customer protection by order that all brokers and brokers keep their clients' credit balances on separate reserve accounts rather than including these resources in the brokerage accounts. The aim of the SEC decision is to protect the balances for customer loans from loss in trading in constant financing and also to facilitate brokers to carry out orders to customers' accounts.

, along with the daily trading process, customer protection rule can also provide the investor's asset protection if the intermediary company fails. Since the investor's assets are separated from the assets that are directly connected to the company, they cannot be used to settle the outstanding debt of the unsuccessful trade enterprise. Instead, the assets contained on the customer account can be simply transferred to Another brokerage and the investor can continue to participate in their usual commercialsDestics and investment projects.

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Customer Protection Rule complains several other government events related to the provision of adequate customer protection for investors. The rule works in hand with the Act on Protection of Investors of Securities by helping to define procedures involved in the management of investors authorized by a brokerage company. The customer protection rule, along with the rule of net capital, is an important part of the wider rules of financial responsibility that define the basics of business operations with the United States.

The customer protection rule, even if it has been developed and enforced in the United States, is not unique. Many countries around the world have adopted similar regulations that work on the protection of the best investors by defining processes that the brokers mediated by other financial organizations will use for responsible and ethically managing investment entrusted to companies. PThe Verbiage and the process may differ slightly from one nation to another, the final result is to create a stable and safe environment for investors who can work with financial experts to increase the value of the assets contained in investment portfolios.