Lowenstein Sandler Secures SEC No-Action Relief for Alpaca Client Brokerage Accounts

Lowenstein Sandler secured two no-action letters from the Securities and Exchange Commission on behalf of its clients eToro USA Securities Inc. and Alpaca Securities LLC. These letters, referred to as the Zero Cash Balance Letters, provide regulatory clarity for broker-dealers and affiliated fintech platforms. The relief permits broker-dealers and clearing firms to offer accounts where stock purchases are funded by drawing from customer bank accounts, crypto accounts, or remittance payment accounts, rather than requiring idle cash balances.

The no-action letters allow custodians to transfer free credit balances from securities transaction proceeds into a customer’s designated external account under a standing authorization. Furthermore, the relief enables introducing broker-dealers to maintain the $5,000 minimum net capital requirement under Rule 15c3-1(a)(2)(vi) even when the customer’s external cash account is held at an affiliate.