Collateral, Control and Conflict: What Rule 15c3-3 Means for SMAs

Recent developments under SEC Rule 15c3-3 are forcing hedge fund managers, allocators and fund CFOs to take a closer look at the economics of collateral management across commingled funds and separately managed accounts.

The changes are technical in form, but economic in consequence.

First, the SEC’s March 30, 2026 order permits US broker-dealers, subject to defined conditions, to pledge certain baskets of Russell 1000 and/or S&P 500 securities as eligible collateral when borrowing fully paid or excess margin equity securities from qualified institutional securities lenders. The order is designed to add liquidity to the US securities lending market and reduce operational risk, while requiring safeguards such as daily mark-to-market, concentration and diversification standards.

Second, the SEC’s amendments to the Customer Protection Rule require major US broker-dealers to run cash account segregations of PBs daily, rather than weekly. The stated objective is to more dynamically match the net amount of cash owed to customers with the amounts maintained in protected accounts.

Together, these developments place new pressure on the collateral management function. More importantly, they expose a structural tension that has long existed in the Separately Managed Accounts (SMA) model but has often been easy to overlook.In this article, we explore the latest guidance as well as what leading hedge funds are doing to stay on top of these new technical requirements.

The conflict few are talking about

When a hedge fund manager runs a commingled vehicle alongside one or more SMA accounts, the prime brokerage relationship does not operate in the same way across both structures.

In a commingled fund manager, collateral optimization, financing negotiation and cheapest-to-deliver selection can generally be managed at the fund level. Long and short exposures, eligible collateral and financing economics are assessed within a single legal and operational structure. The benefits of margin efficiency, financing optimization and collateral substitution flow through the fund collectively.

In an SMA structure, the economics are more fragmented. The relevant account holder is the customer/PB client whose assets must be protected, and the prime broker’s regulatory and commercial obligations are tied to that account. As a result, netting benefits and financing economics do not aggregate at the manager level. They accrue at the account level.

That distinction matters.

Two portfolios running substantially similar strategies — one through a commingled fund and one through an SMA — may face materially different margin requirements, effective financing costs and collateral burdens simply because they sit in different legal and operational structures. The manager may be running the same investment logic, but the collateral economics are not necessarily the same.

For PBs, allocators and managers, that raises a practical question: are the financing costs and collateral returns being measured, attributed and explained at the right level?

Why segregation and attribution now matter

The practical implication is that cash collateral and eligible securities can no longer be managed as a single, undifferentiated pool.

Managers need the ability to segregate collateral at the account level. Cash and securities supporting a commingled fund must be distinguished from cash and securities supporting individual SMA accounts. What was once a back-office distinction is increasingly a front-office economic and fiduciary issue.

They also need to assess financing outcomes at multiple levels. The return generated, retained or foregone on collateral should be measured at the commingled fund level and at the individual SMA level. Without that attribution, managers may struggle to explain why two accounts running similar strategies produce different net outcomes.

Finally, cheapest-to-deliver (CTD) selection must become account-aware. In a commingled structure, CTD optimization can evaluate the full pool of eligible assets within the fund. In an SMA structure, CTD decisions must be made within the boundaries of that account’s holdings, eligibility profile and financing arrangements. Managers relying on pooled collateral views risk systematically over-collateralizing some accounts while under-measuring the economic benefit in others.

The infrastructure implication

Even for PBs, this is impossible to manage with spreadsheets, static reporting or end-of-day reconciliation. Currently, due to legacy PB systems, in an SMA structure managers are often charged gross and account holders ‘repaid’ through a monthly or quarterly rebate. To put it baldly with SMA Accounts, PB books are often wrong until the periodic ‘true up’.

The latest 15c3-3 developments highlight a real-time collateral management challenge: hedge funds and allocators need live visibility into account-level eligibility, segregated cash tracking, CTD optimization and financing return attribution across commingled and SMA structures.

Firms that invest in treasury management technology infrastructure will be better positioned to demonstrate to investors that collateral economics are being actively managed and fairly attributed. Firms that do not may find themselves unable to explain performance differences between commingled and SMA books when investors begin asking more pointed questions. And increasingly, they are asking.

How to reshape your fund collateral economics

See how Hazeltree helps hedge funds manage collateral, liquidity and financing across commingled funds and SMA structures — with account-level visibility, CTD optimization and treasury controls built for complex investment operations. Visit to learn more.