Section 983 — Portfolio Margining

SEC. 983. PORTFOLIO MARGINING.

(a) Advances.--Section 9(a)(1) of the Securities Investor Protection Act of 1970 <<NOTE: 15 USC 78fff-3.>> (15 U.S.C. 78fff3(a)(1)) is amended by inserting "or options on commodity futures contracts'' after "claim for securities''.
(b) Definitions.--Section 16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll) is amended--

(1) by striking paragraph (2) and inserting the following:

"(2) Customer.--

"(A) In general.--The term `customer' of a debtor means any person (including any person with whom the debtor deals as principal or agent) who has a claim on account of securities received, acquired, or held by the debtor in the ordinary course of its business as a broker or dealer from or for the securities accounts of such person for safekeeping, with a view to sale, to cover consummated sales, pursuant to purchases, as
collateral, security, or for purposes of effecting transfer.
"(B) Included persons.--The term `customer' includes--

"(i) any person who has deposited cash with the debtor for the purpose of purchasing securities;
"(ii) any person who has a claim against the debtor for cash, securities, futures contracts, or options on futures contracts received, acquired, or held in a portfolio margining account carried as a securities account pursuant to a portfolio margining program approved by the Commission; and
"(iii) any person who has a claim against the debtor arising out of sales or conversions of such securities.

"(C) Excluded persons.--The term 'customer' does not include any person, to the extent that--

"(i) the claim of such person arises out of transactions with a foreign subsidiary of a member of SIPC; or
"(ii) such person has a claim for cash or securities which by contract, agreement, or understanding, or by operation of law, is part of
the capital of the debtor, or is subordinated to the claims of any or all creditors of the debtor, notwithstanding that some ground exists
for declaring such contract, agreement, or understanding void or voidable in a suit between the claimant and the debtor.'';

(2) in paragraph (4)--

(A) in subparagraph (C), by striking "and'' at the end;
(B) by redesignating subparagraph (D) as subparagraph (E); and
(C) by inserting after subparagraph (C) the following:

"(D) in the case of a portfolio margining account of a customer that is carried as a securities account pursuant to a portfolio margining program approved by the Commission, a futures contract or an option on a futures contract received, acquired, or held by or for
the account of a debtor from or for such portfolio margining account, and the proceeds thereof; and'';

(3) in paragraph (9), in the matter following subparagraph (L), by inserting after "Such term'' the following: "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''; and
(4) in paragraph (11)--

(A) in subparagraph (A)--

(i) by striking "filing date, all'' and all that follows through the end of the subparagraph and inserting the following: "filing date--
"(i) all securities positions of such customer (other than customer name securities reclaimed by such customer); and
"(ii) all positions in futures contracts and options on futures contracts held in a portfolio margining account carried as a securities account pursuant to a portfolio margining program approved by the Commission, including all property collateralizing such positions, to the extent that such property is not otherwise included herein; minus''; and

(B) in the matter following subparagraph (C), by striking "In determining'' and inserting the following:
"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''.