---
kind: "section"
citation: "15 U.S.C. § 78lll"
title: "15"
title_heading: "Commerce and Trade"
number: "78lll"
heading: "Definitions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/78lll"
units:
  - "Chapter 2B–1 — Securities Investor Protection"
---

# §78lll. Definitions


For purposes of this chapter, including the application of the Bankruptcy Act to a [liquidation proceeding](#10):

- (1) **Commission—** The term “Commission” means the [Securities](#14) and Exchange Commission.
- (2) **Customer—**
  - (A) **In general—** The term “customer” of a [debtor](#5) means any [person](/usc/15/7a.md?p=6) (including any [person](/usc/15/7a.md?p=6) with whom the [debtor](#5) deals as principal or agent) who has a claim on account of [securities](#14) received, acquired, or held by the [debtor](#5) in the ordinary course of its business as a broker or dealer from or for the [securities](#14) accounts of such [person](/usc/15/7a.md?p=6) for safekeeping, with a view to sale, to cover consummated sales, pursuant to purchases, as collateral, [security](#14), or for purposes of effecting transfer.
  - (B) **Included persons—** The term “[customer](#2-A)” includes—
    - (i) any [person](/usc/15/7a.md?p=6) who has deposited cash with the [debtor](#5) for the purpose of purchasing [securities](#14);
    - (ii) any [person](/usc/15/7a.md?p=6) who has a claim against the [debtor](#5) for cash, [securities](#14), futures contracts, or options on futures contracts received, acquired, or held in a portfolio margining account carried as a [securities](#14) account pursuant to a portfolio margining program approved by the [Commission](#1); and
    - (iii) any [person](/usc/15/7a.md?p=6) who has a claim against the [debtor](#5) arising out of sales or conversions of such [securities](#14).
  - (C) **Excluded persons—** The term “[customer](#2-A)” does not include any [person](/usc/15/7a.md?p=6), to the extent that—
    - (i) the claim of such [person](/usc/15/7a.md?p=6) arises out of transactions with a [foreign subsidiary](#8) of a member of SIPC; or
    - (ii) such [person](/usc/15/7a.md?p=6) has a claim for cash or [securities](#14) which by contract, [agreement](/usc/15/7a.md?p=2), or understanding, or by operation of law, is part of the capital of the [debtor](#5), or is subordinated to the claims of any or all creditors of the [debtor](#5), notwithstanding that some ground exists for declaring such contract, [agreement](/usc/15/7a.md?p=2), or understanding void or voidable in a suit between the [claimant](/usc/15/7a.md?p=4) and the [debtor](#5).
- (3) **Customer name securities—** The term “customer name securities” means [securities](#14) which were held for the account of a [customer](#2-A) on the [filing date](#7) by or on behalf of the [debtor](#5) and which on the [filing date](#7) were registered in the name of the [customer](#2-A), or were in the process of being so registered pursuant to instructions from the [debtor](#5), but does not include [securities](#14) registered in the name of the [customer](#2-A) which, by endorsement or otherwise, were in negotiable form.
- (4) **Customer property—** The term “customer property” means cash and [securities](#14) (except [customer name securities](#3) delivered to the [customer](#2-A)) at any time received, acquired, or held by or for the account of a [debtor](#5) from or for the [securities](#14) accounts of a [customer](#2-A), and the proceeds of any such property transferred by the [debtor](#5), including property unlawfully converted. The term “customer property” includes—
  - (A) [securities](#14) held as property of the [debtor](#5) to the extent that the inability of the [debtor](#5) to meet its obligations to [customers](#2-A) for their [net equity](#11) claims based on [securities](#14) of the same class and series of an issuer is attributable to the [debtor](#5)’s noncompliance with the requirements of [section 78o(c)(3)](/usc/15/78o.md?p=c-3) of this title and the rules prescribed under such section;
  - (B) resources provided through the use or realization of [customers](#2-A)’ debit cash balances and other [customer](#2-A)-related debit items as defined by the [Commission](#1) by rule;
  - (C) any cash or [securities](#14) apportioned to [customer property](#4) pursuant to [section 78fff(d) of this title](/usc/15/78fff.md?p=d);
  - (D) in the case of a portfolio margining account of a [customer](#2-A) that is carried as a [securities](#14) account pursuant to a portfolio margining program approved by the [Commission](#1), a futures contract or an option on a futures contract received, acquired, or held by or for the account of a [debtor](#5) from or for such portfolio margining account, and the proceeds thereof; and
  - (E) any other property of the [debtor](#5) which, upon compliance with applicable laws, rules, and regulations, would have been set aside or held for the benefit of [customers](#2-A), unless the trustee determines that including such property within the meaning of such term would not significantly increase [customer property](#4).
- (5) **Debtor—** The term “debtor” means a member of SIPC with respect to whom an application for a [protective decree](#13) has been filed under [section 78eee(a)(3) of this title](/usc/15/78eee.md?p=a-3) or a direct payment procedure has been instituted under [section 78fff–4(b) of this title](/usc/15/78fff–4.md?p=b).
- (6) **Examining authority—** The term “examining authority” means, with respect to any member of SIPC (A) the self-regulatory organization which inspects or examines such member of SIPC, or (B) the [Commission](#1) if such member of SIPC is not a member of or participant in any self-regulatory organization or if the [Commission](#1) has designated itself examining authority for such member pursuant to [section 78iii(c) of this title](/usc/15/78iii.md?p=c).
- (7) **Filing date—** The term “filing date” means the date on which an application for a [protective decree](#13) is filed under [section 78eee(a)(3) of this title](/usc/15/78eee.md?p=a-3), except that—
  - (A) if a petition under [title 11](/usc/11.md) concerning the [debtor](#5) was filed before such date, the term “[filing date](#7)” means the date on which such petition was filed;
  - (B) if the [debtor](#5) is the subject of a proceeding pending in any court or before any agency of the United States or any [State](/usc/15/15g.md?p=2) in which a receiver, trustee, or liquidator for such [debtor](#5) has been appointed and such proceeding was commenced before the date on which such application was filed, the term “[filing date](#7)” means the date on which such proceeding was commenced; or
  - (C) if the [debtor](#5) is the subject of a direct payment procedure or was the subject of a direct payment procedure discontinued by SIPC pursuant to [section 78fff–4(f) of this title](/usc/15/78fff–4.md?p=f), the term “[filing date](#7)” means the date on which notice of such direct payment procedure was published under [section 78fff–4(b) of this title](/usc/15/78fff–4.md?p=b).
- (8) **Foreign subsidiary—** The term “foreign subsidiary” means any subsidiary of a member of SIPC which has its principal place of business in a foreign country or which is organized under the laws of a foreign country.
- (9) **Gross revenues from the securities business—** The term “gross revenues from the securities business” means the sum of (but without duplication)—
  - (A) [commissions](#1) earned in connection with transactions in [securities](#14) effected for [customers](#2-A) as agent (net of [commissions](#1) paid to other brokers and dealers in connection with such transactions) and markups with respect to purchases or sales of [securities](#14) as principal;
  - (B) charges for executing or clearing transactions in [securities](#14) for other brokers and dealers;
  - (C) the net realized gain, if any, from principal transactions in [securities](#14) in trading accounts;
  - (D) the net profit, if any, from the management of or participation in the underwriting or distribution of [securities](#14);
  - (E) interest earned on [customers](#2-A)’ [securities](#14) accounts;
  - (F) fees for investment advisory services (except when rendered to one or more registered investment companies or insurance company separate accounts) or account supervision with respect to [securities](#14);
  - (G) fees for the solicitation of proxies with respect to, or tenders or exchanges of, [securities](#14);
  - (H) income from service charges or other surcharges with respect to [securities](#14);
  - (I) except as otherwise provided by rule of the [Commission](#1), dividends and interest received on [securities](#14) in investment accounts of the broker or dealer;
  - (J) fees in connection with put, call, and other option transactions in [securities](#14);
  - (K) [commissions](#1) earned from transactions in (i) certificates of deposit, and (ii) Treasury bills, bankers acceptances, or commercial paper which have a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof, the maturity of which is likewise limited, except that SIPC shall by bylaw include in the aggregate of gross revenues only an appropriate percentage of such [commissions](#1) based on SIPC’s loss experience with respect to such instruments over at least the preceding five years; and
  - (L) fees and other income from such other categories of the [securities](#14) business as SIPC shall provide by bylaw.

  Such term includes revenues earned by a broker or dealer in connection with a transaction in the portfolio margining account of a [customer](#2-A) carried as [securities](#14) accounts pursuant to a portfolio margining program approved by the [Commission](#1). Such term does not include revenues received by a broker or dealer in connection with the distribution of shares of a registered open end investment company or unit investment trust or revenues derived by a broker or dealer from the sale of variable annuities or from the conduct of the business of insurance.

- (10) **Liquidation proceeding—** The term “liquidation proceeding” means any proceeding for the liquidation of a [debtor](#5) under this chapter in which a trustee has been appointed under [section 78eee(b)(3) of this title](/usc/15/78eee.md?p=b-3).
- (11) **Net equity—** The term “net equity” means the dollar amount of the account or accounts of a [customer](#2-A), to be determined by—
  - (A) calculating the sum which would have been owed by the [debtor](#5) to such [customer](#2-A) if the [debtor](#5) had liquidated, by sale or purchase on the [filing date](#7)—
    - (i) all [securities](#14) positions of such [customer](#2-A) (other than [customer name securities](#3) reclaimed by such [customer](#2-A)); and
    - (ii) all positions in futures contracts and options on futures contracts held in a portfolio margining account carried as a [securities](#14) account pursuant to a portfolio margining program approved by the [Commission](#1), including all property collateralizing such positions, to the extent that such property is not otherwise included herein; minus
  - (B) any indebtedness of such [customer](#2-A) to the [debtor](#5) on the [filing date](#7); plus
  - (C) any payment by such [customer](#2-A) of such indebtedness to the [debtor](#5) which is made with the approval of the trustee and within such period as the trustee may determine (but in no event more than sixty days after the publication of notice under [section 78fff–2(a) of this title](/usc/15/78fff–2.md?p=a)).

  A claim for a commodity futures contract received, acquired, or held in a portfolio margining account pursuant to a portfolio margining program approved by the [Commission](#1) or a claim for a [security](#14) futures contract, shall be deemed to be a claim with respect to such contract as of the [filing date](#7), and such claim shall be treated as a claim for cash. In determining net equity under this paragraph, accounts held by a [customer](#2-A) in separate capacities shall be deemed to be accounts of separate [customers](#2-A).

- (12) **Persons registered as brokers or dealers—** The term “persons registered as brokers or dealers” includes any [person](/usc/15/7a.md?p=6) who is a member of a national [securities](#14) exchange other than a government [securities](#14) broker or government [securities](#14) dealer registered under [section 78o–5(a)(1)(A)](/usc/15/78o–5.md?p=a-1-A) of this title.
- (13) **Protective decree—** The term “protective decree” means a decree, issued by a court upon application of SIPC under [section 78eee(a)(3) of this title](/usc/15/78eee.md?p=a-3), that the [customers](#2-A) of a member of SIPC are in need of the protection provided under this chapter.
- (14) **Security—** The term “Security” means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, any collateral trust certificate, preorganization certificate or subscription, transferable share, voting trust certificate, certificate of deposit, certificate of deposit for a security, or any security future as that term is defined in [section 78c(a)(55)(A) of this title](/usc/15/78c.md?p=a-55-A), any investment contract or certificate of interest or participation in any profit-sharing [agreement](/usc/15/7a.md?p=2) or in any oil, gas, or mineral royalty or lease (if such investment contract or interest is the subject of a registration statement with the [Commission](#1) pursuant to the provisions of the Securities Act of 1933 [[15 U.S.C. 77a](/usc/15/77a.md) et seq.]), any put, call, straddle, option, or privilege on any security, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase or sell any of the foregoing, and any other instrument commonly known as a security. Except as specifically provided above, the term “security” does not include any currency, or any commodity or related contract or futures contract, or any warrant or right to subscribe to or purchase or sell any of the foregoing.

## Source credit

(Pub. L. 91–598, § 16, formerly § 12, Dec. 30, 1970, 84 Stat. 1656; renumbered § 16 and amended Pub. L. 95–283, §§ 9, 15, May 21, 1978, 92 Stat. 260, 271; Pub. L. 95–598, title III, § 308(o), Nov. 6, 1978, 92 Stat. 2676; Pub. L. 97–303, § 7, Oct. 13, 1982, 96 Stat. 1410; Pub. L. 100–181, title VIII, § 802, Dec. 4, 1987, 101 Stat. 1265; Pub. L. 106–554, § 1(a)(5) [title II, § 203(d)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A–424; Pub. L. 111–203, title IX, § 983(b), July 21, 2010, 124 Stat. 1931; Pub. L. 119–27, § 17(e), July 18, 2025, 139 Stat. 463.)

## Notes

### Amendment of Paragraph (14)

Pub. L. 119–27, §§ 17(e), 20, July 18, 2025, 139 Stat. 463, 466, provided that, effective on the earlier of the date that is 18 months after July 18, 2025, or the date that is 120 days after the date on which the primary Federal payment stablecoin regulators issue any final regulations implementing Pub. L. 119–27, paragraph (14) of this section is amended by adding at the end the following: “The term ‘security’ does not include a payment stablecoin issued by a permitted payment stablecoin issuer, as such terms are defined in section 5901 of title 12.” See 2025 Amendment note below.

### Editorial Notes

### References in Text

This chapter, referred to in provision preceding par. (1), and in pars. (10) and (13), was in the original “this Act”, meaning Pub. L. 91–598, Dec. 30, 1970, 84 Stat. 1636. For complete classification of this Act to the Code, see Tables.

The Bankruptcy Act, referred to in provision preceding par. (1), is act July 1, 1898, ch. 541, 30 Stat. 544, which was classified generally to former Title 11, Bankruptcy. The Act was repealed effective Oct. 1, 1979, by Pub. L. 95–598, §§ 401(a), 402(a), Nov. 6, 1978, 92 Stat. 2682, section 101 of which enacted revised Title 11.

The Securities Act of 1933, referred to in par. (14), is act May 27, 1933, ch. 38, title I, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. For complete classification of this Act to the Code, see section 77a of this title and Tables.

### Amendments

2025—Par. (14). Pub. L. 119–27 inserted at end “The term ‘security’ does not include a payment stablecoin issued by a permitted payment stablecoin issuer, as such terms are defined in section 5901 of title 12.”

2010—Par. (2). Pub. L. 111–203, § 983(b)(1), added par. (2) and struck out former par. (2) which defined “customer”.

Par. (4)(D), (E). Pub. L. 111–203, § 983(b)(2), added subpar. (D) and redesignated former subpar. (D) as (E).

Par. (9). Pub. L. 111–203, § 983(b)(3), in concluding provisions, inserted “includes revenues earned by a broker or dealer in connection with a transaction in the portfolio margining account of a customer carried as securities accounts pursuant to a portfolio margining program approved by the Commission. Such term” before “does not include”.

Par. (11). Pub. L. 111–203, § 983(b)(4)(B), in concluding provisions, substituted “A claim for a commodity futures contract received, acquired, or held in a portfolio margining account pursuant to a portfolio margining program approved by the Commission or a claim for a security futures contract, shall be deemed to be a claim with respect to such contract as of the filing date, and such claim shall be treated as a claim for cash. In determining” for “In determining”.

Par. (11)(A). Pub. L. 111–203, § 983(b)(4)(A), substituted “by sale or purchase on the filing date—” for “by sale or purchase on the filing date, all securities positions of such customer (other than customer name securities reclaimed by such customer); minus” and added cls. (i) and (ii).

2000—Par. (14). Pub. L. 106–554 inserted “or any security future as that term is defined in section 78c(a)(55)(A) of this title,” after “certificate of deposit for a security,”.

1987—Par. (12). Pub. L. 100–181 inserted “other than a government securities broker or government securities dealer registered under section 78o–5(a)(1)(A) of this title”.

1982—Par. (14). Pub. L. 97–303 inserted “any put, call, straddle, option, or privilege on any security, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency,” after “the Securities Act of 1933 [15 U.S.C.A. § 77a et seq.]),” and substituted “Except as specifically provided above, the term ‘security’ does not include” for “The term ‘security’ does not include”.

1978—Par. (1). Pub. L. 95–598, § 308(o)(1), (3), struck out par. (1) definition of “Bankruptcy Act” and redesignated par. (2) as (1).

Pars. (2) to (6). Pub. L. 95–598, § 309(o)(3), redesignated pars. (3) to (7) as (2) to (6), respectively. Former par. (2) redesignated (1).

Par. (7). Pub. L. 95–598, § 308(o)(2), (3), redesignated par. (8) as (7) and substituted in subpar. (A) “if a petition under title 11 concerning the debtor was filed before such date” for “if a petition was filed before such date by or against the debtor under the Bankruptcy Act, or under chapter X or XI of such Act, as now in effect or as amended from time to time”. Former par. (7) redesignated (6).

Pars. (8) to (15). Pub. L. 95–598, § 308(o)(3), redesignated pars. (9) to (15) as (8) to (14), respectively. Former par. (8) redesignated (7).

Pub. L. 95–283 in introductory text inserted requirement for applicability of terms to a liquidation proceeding involving the Bankruptcy Act, in par. (1) heading substituted “Bankruptcy Act” for “Self-regulatory organization”, and in text substituted provisions defining such terms, in par. (2) heading substituted “Commission” for “Financial responsibility rules”, and in text substituted provisions defining such terms, in par. (3) heading substituted “Customer” for “Examining authority”, and in text substituted provisions defining such terms, and added pars. (4) to (15).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2025 Amendment

Amendment by Pub. L. 119–27 effective on the earlier of the date that is 18 months after July 18, 2025, or the date that is 120 days after the date on which the primary Federal payment stablecoin regulators issue any final regulations implementing Pub. L. 119–27, see section 20 of Pub. L. 119–27, set out as an Effective Date note under section 5901 of Title 12, Banks and Banking.

### Effective Date of 2010 Amendment

Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking.

### Effective Date of 1978 Amendment

Amendment of section by Pub. L. 95–598 effective Oct. 1, 1979, see section 402(a) of Pub. L. 95–598, set out as an Effective Date note preceding section 101 of Title 11, Bankruptcy.