---
kind: "section"
citation: "15 U.S.C. § 78c–5"
title: "15"
title_heading: "Commerce and Trade"
number: "78c–5"
heading: "Segregation of assets held as collateral in security-based swap transactions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/78c-5"
units:
  - "Chapter 2B — Securities Exchanges"
---

# §78c–5. Segregation of assets held as collateral in security-based swap transactions

- (a) **Registration requirement—** It shall be unlawful for any [person](/usc/15/78c.md?p=a-9) to accept any money, [securities](/usc/15/78c.md?p=a-10), or property (or to extend any credit in lieu of money, [securities](/usc/15/78c.md?p=a-10), or property) from, for, or on behalf of a [security-based swaps](/usc/15/78c.md?p=a-68-A) customer to [margin](/usc/15/78c.md?p=a-57-A), guarantee, or secure a [security-based swap](/usc/15/78c.md?p=a-68-A) cleared by or through a [clearing agency](/usc/15/78c.md?p=a-23-A) (including money, [securities](/usc/15/78c.md?p=a-10), or property accruing to the customer as the result of such a [security-based swap](/usc/15/78c.md?p=a-68-A)), unless the [person](/usc/15/78c.md?p=a-9) shall have registered under this chapter with the [Commission](/usc/15/78c.md?p=a-15) as a [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A), and the registration shall not have expired nor been suspended nor revoked.
- (b) **Cleared security-based swaps—**
  - (1) **Segregation required—** A [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A) shall treat and deal with all money, [securities](/usc/15/78c.md?p=a-10), and property of any [security-based swaps](/usc/15/78c.md?p=a-68-A) customer received to [margin](/usc/15/78c.md?p=a-57-A), guarantee, or secure a [security-based swap](/usc/15/78c.md?p=a-68-A) cleared by or though[^1] a [clearing agency](/usc/15/78c.md?p=a-23-A) (including money, [securities](/usc/15/78c.md?p=a-10), or property accruing to the [security-based swaps](/usc/15/78c.md?p=a-68-A) customer as the result of such a [security-based swap](/usc/15/78c.md?p=a-68-A)) as belonging to the [security-based swaps](/usc/15/78c.md?p=a-68-A) customer.
  - (2) **Commingling prohibited—** Money, [securities](/usc/15/78c.md?p=a-10), and property of a [security-based swaps](/usc/15/78c.md?p=a-68-A) customer described in [paragraph (1)](#b-1) shall be separately accounted for and shall not be commingled with the funds of the [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or be used to [margin](/usc/15/78c.md?p=a-57-A), secure, or guarantee any trades or contracts of any [security-based swaps](/usc/15/78c.md?p=a-68-A) customer or [person](/usc/15/78c.md?p=a-9) other than the [person](/usc/15/78c.md?p=a-9) for whom the same are held.
- (c) **Exceptions—**
  - (1) **Use of funds—**
    - (A) **In general—** Notwithstanding [subsection (b)](#b), money, [securities](/usc/15/78c.md?p=a-10), and property of a [security-based swaps](/usc/15/78c.md?p=a-68-A) customer of a [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A) described in [subsection (b)](#b) may, for convenience, be commingled and deposited in the same 1 or more accounts with any [bank](/usc/15/78c.md?p=a-6) or trust [company](/usc/15/78c.md?p=a-19) or with a [clearing agency](/usc/15/78c.md?p=a-23-A).
    - (B) **Withdrawal—** Notwithstanding [subsection (b)](#b), such share of the money, [securities](/usc/15/78c.md?p=a-10), and property described in [subparagraph (A)](#c-1-A) as in the normal course of business shall be necessary to [margin](/usc/15/78c.md?p=a-57-A), guarantee, secure, transfer, adjust, or settle a cleared [security-based swap](/usc/15/78c.md?p=a-68-A) with a [clearing agency](/usc/15/78c.md?p=a-23-A), or with any [member](/usc/15/78c.md?p=a-3-A) of the [clearing agency](/usc/15/78c.md?p=a-23-A), may be withdrawn and applied to such purposes, including the payment of [commissions](/usc/15/78c.md?p=a-15), brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the cleared [security-based swap](/usc/15/78c.md?p=a-68-A).
  - (2) **Commission action—** Notwithstanding [subsection (b)](#b), in accordance with such terms and conditions as the [Commission](/usc/15/78c.md?p=a-15) may prescribe by rule, regulation, or order, any money, [securities](/usc/15/78c.md?p=a-10), or property of the [security-based swaps](/usc/15/78c.md?p=a-68-A) customer of a [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A) described in [subsection (b)](#b) may be commingled and deposited as provided in this section with any other money, [securities](/usc/15/78c.md?p=a-10), or property received by the [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A) and required by the [Commission](/usc/15/78c.md?p=a-15) to be separately accounted for and treated and dealt with as belonging to the [security-based swaps](/usc/15/78c.md?p=a-68-A) customer of the [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A).
- (d) **Permitted investments—** Money described in [subsection (b)](#b) may be invested in obligations of the United States, in general obligations of any [State](/usc/15/78c.md?p=a-16) or of any political subdivision of a [State](/usc/15/78c.md?p=a-16), and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the [Commission](/usc/15/78c.md?p=a-15) may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the [Commission](/usc/15/78c.md?p=a-15) may prescribe.
- (e) **Prohibition—** It shall be unlawful for any [person](/usc/15/78c.md?p=a-9), including any [clearing agency](/usc/15/78c.md?p=a-23-A) and any depository institution, that has received any money, [securities](/usc/15/78c.md?p=a-10), or property for deposit in a [separate account](/usc/15/78c.md?p=a-19) or accounts as provided in [subsection (b)](#b) to hold, dispose of, or use any such money, [securities](/usc/15/78c.md?p=a-10), or property as belonging to the depositing [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or any [person](/usc/15/78c.md?p=a-9) other than the [swaps](/usc/15/78c.md?p=a-69) customer of the [broker](/usc/15/78c.md?p=a-4-A), [dealer](/usc/15/78c.md?p=a-5-A), or [security-based swap dealer](/usc/15/78c.md?p=a-71-A).
- (f) **Segregation requirements for uncleared security-based swaps—**
  - (1) **Segregation of assets held as collateral in uncleared security-based swap transactions—**
    - (A) **Notification—** A [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall be required to notify the counterparty of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) at the beginning of a [security-based swap](/usc/15/78c.md?p=a-68-A) transaction that the counterparty has the right to require segregation of the funds of other property supplied to [margin](/usc/15/78c.md?p=a-57-A), guarantee, or secure the obligations of the counterparty.
    - (B) **Segregation and maintenance of funds—** At the request of a counterparty to a [security-based swap](/usc/15/78c.md?p=a-68-A) that provides funds or other property to a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) to [margin](/usc/15/78c.md?p=a-57-A), guarantee, or secure the obligations of the counterparty, the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall—
      - (i) segregate the funds or other property for the benefit of the counterparty; and
      - (ii) in accordance with such rules and regulations as the [Commission](/usc/15/78c.md?p=a-15) may promulgate, maintain the funds or other property in a segregated account separate from the assets and other interests of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A).
  - (2) **Applicability—** The requirements described in [paragraph (1)](#f-1) shall—
    - (A) apply only to a [security-based swap](/usc/15/78c.md?p=a-68-A) between a counterparty and a [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) that is not submitted for clearing to a [clearing agency](/usc/15/78c.md?p=a-23-A); and
    - (B)
      - (i) not apply to variation [margin](/usc/15/78c.md?p=a-57-A) payments; or
      - (ii) not preclude any commercial arrangement regarding—
        - (I) the investment of segregated funds or other property that may only be invested in such investments as the [Commission](/usc/15/78c.md?p=a-15) may permit by rule or regulation; and
        - (II) the related allocation of gains and losses resulting from any investment of the segregated funds or other property.
  - (3) **Use of independent third-party custodians—** The segregated account described in [paragraph (1)](#f-1) shall be—
    - (A) carried by an independent third-party custodian; and
    - (B) designated as a segregated account for and on behalf of the counterparty.
  - (4) **Reporting requirement—** If the counterparty does not choose to require segregation of the funds or other property supplied to [margin](/usc/15/78c.md?p=a-57-A), guarantee, or secure the obligations of the counterparty, the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) shall report to the counterparty of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) on a quarterly basis that the back office procedures of the [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) relating to [margin](/usc/15/78c.md?p=a-57-A) and collateral requirements are in compliance with the [agreement](/usc/15/7a.md?p=2) of the counterparties.
- (g) **Bankruptcy—** A [security-based swap](/usc/15/78c.md?p=a-68-A), as defined in [section 78c(a)(68) of this title](/usc/15/78c.md?p=a-68) shall be considered to be a [security](/usc/15/78c.md?p=a-10) as such term is used in section 101(53A)(B) and subchapter III of title 11.[^2] An account that holds a [security-based swap](/usc/15/78c.md?p=a-68-A), other than a portfolio margining account referred to in [section 78o(c)(3)(C)](/usc/15/78o.md?p=c-3-C) of this title shall be considered to be a [securities](/usc/15/78c.md?p=a-10) account, as that term is defined in [section 741 of title 11](/usc/11/741.md). The definitions of the terms “[purchase](/usc/15/78c.md?p=a-13)” and “sale” in [section 78c(a)(13)](/usc/15/78c.md?p=a-13) and (14) of this title shall be applied to the terms “[purchase](/usc/15/78c.md?p=a-13)” and “sale”, as used in [section 741 of title 11](/usc/11/741.md). The term “customer”, as defined in [section 741 of title 11](/usc/11/741.md), excludes any [person](/usc/15/78c.md?p=a-9), to the extent that such [person](/usc/15/78c.md?p=a-9) has a claim based on any open repurchase [agreement](/usc/15/7a.md?p=2), open reverse repurchase [agreement](/usc/15/7a.md?p=2), stock borrowed [agreement](/usc/15/7a.md?p=2), non-cleared option, or non-cleared [security-based swap](/usc/15/78c.md?p=a-68-A) except to the extent of any [margin](/usc/15/78c.md?p=a-57-A) delivered to or by the customer with respect to which there is a customer protection requirement under [section 78o(c)(3)](/usc/15/78o.md?p=c-3) of this title or a segregation requirement.

## Footnotes

[^1]: So in original. Probably should be “through”.
[^2]: So in original.

## Source credit

(June 6, 1934, ch. 404, title I, § 3E, as added Pub. L. 111–203, title VII, § 763(d), July 21, 2010, 124 Stat. 1774.)

## Notes

### Editorial Notes

### References in Text

This chapter, referred to in subsec. (a), was in the original “this title”. See References in Text note set out under section 78a of this title.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle B (§§ 761–774) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle B, see section 774 of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 77b of this title.