Permissible Use of Customers' Securities

What this video covers

• The one-time written authorization for margin securities via the hypothecation clause in the standard margin agreement, and why this does NOT extend to fully paid securities
• The four heightened conditions required to lend fully paid or excess margin securities: 30-day advance Financial Industry Regulatory Authority (FINRA) notice, appropriateness review, written disclosure, and daily-marked collateral
• Why the 30-day FINRA notice is a gating requirement that runs from the regulator's receipt of notice, not from the customer's signature
• What the appropriateness review demands beyond generic suitability, including reasonable basis for income-versus-risk balance and customer understanding of protection limits
• The Securities Investor Protection Act (SIPA) / Securities Investor Protection Corporation (SIPC) gap: loaned securities are not SIPC-protected and rely solely on contractual collateral
• The content and form requirements for written customer disclosure, including standalone prominence, voting rights loss, cash-in-lieu dividends, and loss of qualified dividend tax treatment
• The daily mark-to-market collateral requirement: cash or qualified securities at least equal to market value, with same-day adjustment for price movements