FinTech Five

1. Lowenstein Sandler Secures No-Action Relief for Zero Cash Balance Brokerage Accounts

On September 17, Lowenstein Sandler secured two no-action letters (the Zero Cash Balance Letters) from the Securities and Exchange Commission (SEC) on behalf of its clients eToro USA Securities Inc. and Alpaca Securities LLC, providing important regulatory clarity for broker-dealers and affiliated fintech platforms. The Zero Cash Balance Letters permit broker-dealers and clearing firms to offer brokerage accounts where stock purchases are funded on an as-needed basis by drawing from customer bank accounts, crypto accounts, or remittance payment accounts held with affiliated or third-party financial institutions, rather than maintaining idle cash balances. On the technical side, the letters allow custodians to transfer free credit balances from securities transaction proceeds into a customer’s designated external account under a standing authorization pursuant to Exchange Act Rule 15c3-3(j)(2)(i)