SEC Grants No-Action Relief for Fintech Brokerage Accounts

A recent development in regulatory clarity has been achieved for broker-dealers and affiliated fintech platforms. On September 17, Lowenstein Sandler secured no-action letters from the Securities and Exchange Commission (SEC) on behalf of eToro USA Securities Inc. and Alpaca Securities LLC. These letters permit broker-dealers to offer brokerage accounts where stock purchases are funded by drawing from customer bank accounts or crypto accounts.

The no-action relief allows custodians to transfer free credit balances from securities transaction proceeds into a customer's external account, under specific rules. This move is seen as providing important regulatory clarity for the industry.