Learn the possession, reserve, and exemption logic behind the customer-protection function on the Series 27 exam.
The third Series 27 chapter centers on customer protection. This is where the FINOP proves that the firm knows where customer securities are, when reserve computations are required, how customer and PAB balances are classified, and when exemptions from the Customer Protection Rule are available. These questions are highly testable because they combine definitions, calculations, and operating judgment.
Read this chapter as the custody-and-reserve layer of the firm. Start with possession and control, then move through customer and PAB reserve computations, reserve bank accounts, and exemption logic. Most mistakes in this chapter come from mixing customer, PAB, and noncustomer concepts or from missing the operational consequences of classification errors.