Trust & Safety

Jiko was built from the ground up on principles of trust, safety, security, and compliance. The foundational design principle of Jiko’s technology and its infrastructure is safety. Jiko is dedicated to maintaining rigorous standards of security and data protection. Jiko has achieved SOC 2 and PCI certifications and utilizes cloud-based infrastructure with robust data encryption. The SOC 2 certification validates the effectiveness of Jiko’s internal controls, safeguarding the security and privacy of customer information. Meanwhile, PCI certification ensures the secure handling of payment card data. Jiko remains fully committed to upholding thorough security and compliance standards.

Jiko is a financial institution that is regulated and held to the same standards as all banks and broker-dealers. Jiko has and will continue to have sound risk management practices to meet requirements and standards as a satisfactory financial institution. This includes the ability to identify, assess, control, and monitor compliance risks across the company. Jiko is
overseen by the Federal Reserve Bank, The Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA)¹.

Operationally, all customer Treasury bills at Jiko are stored in a segregated, no-lien, exclusively for-the-benefit-of-customers account at The Bank of New York Mellon (BNY Mellon), one of the world’s largest custodian banks, and reconciled daily. Even in the case of bankruptcy, neither Jiko Securities, Inc., nor Jiko Bank (nor MCNB) would have any claim on customers’ assets, which would be liquidated and the proceeds delivered to customers.

Jiko's Corporate Structure

Jiko Group, Inc. (JGI) is a bank holding company regulated by the Federal Reserve. JGI has three primary operating subsidiaries: Jiko Technologies, Inc.; Jiko Bank, which is a division of Mid-Central National Bank (MCNB; MCNB is a wholly owned subsidiary of JGI); and Jiko Securities, Inc., a registered broker-dealer.

• Jiko Technologies, Inc. builds and operates Jiko’s privacy-first cloud-based infrastructure.
• Jiko Bank, which is regulated by the OCC, provides banking rails for payments and transfers.
• Jiko Securities, Inc., a FINRA-registered carrying firm and a member of SIPC, conducts all trading on behalf of Jiko customers.

How Jiko Corporate Works

Jiko Corporate is Jiko’s direct product for businesses. To fund a Jiko Corporate account, a Jiko Corporate customer wires funds to Jiko Bank, which sweeps the funds intraday through Jiko Securities, Inc. to a “special reserve account” held at BNY Mellon for the benefit of Jiko’s customers. Then, Jiko, on behalf of the customer, purchases securities and settles the transaction by transferring the customer cash against delivery by Jiko of government securities into a “segregated account” held at BNY Mellon for the benefit of Jiko’s customers. The government securities are maintained in that segregated account at BNY
Mellon for so long as the customer holds them. Furthermore, all trades are reported to FINRA (via TRACE).

When the customer wishes to transfer cash out of Jiko, through a sale of securities, it instructs Jiko Securities, Inc., which delivers cash to BNY Mellon against BNY Mellon’s delivery of securities to Jiko Securities, Inc. BNY Mellon then transfers the customer’s cash to Jiko which immediately sweeps the cash to Jiko Bank, which then wires the cash
out according to the customer’s instructions.

Jiko is “de-levered” for systemic safety and scale. As such, Jiko does not provide any other banking or brokerage services, such as underwriting or proprietary trading.

Jiko Account Structure

Today, commercial customers automatically get four Bank Accounts and four Brokerage Accounts corresponding to investments in 1-month, 3-month, 6-month, and 12-month US Treasury bills, respectively.

Each Bank Account will be linked to a brokerage account maintained at Jiko Securities, Inc. Jiko Securities, Inc. will establish a separate Jiko Brokerage Account for each investment strategy it offers, and one Bank Account for each such Jiko Brokerage Account.

All wire transfers to a Bank Account will be added to the balance of the Bank Account, and when funds are available in a Bank Account these funds will be promptly transferred to the linked Jiko Brokerage Account and invested by Jiko Securities, Inc. in the maturity of the customer’s choosing, after which the Bank Account will have a zero balance. Accordingly, each Bank Account functions as a "zero-balance" account, with all excess funds "swept" to the linked Jiko Brokerage Account.

To fund wire transfers from a Bank Account, Jiko Securities, Inc. will make sufficient funds available to fund each such transaction and transfer that amount from the linked Jiko Brokerage Account to the Bank Account, all generally in real-time. In the unlikely event that Jiko Securities, Inc. is unable to make a customer’s funds available or there are insufficient funds in the Jiko Brokerage Account, the wire transfer transaction will be declined.

For more information, see Jiko’s Commercial Bank Account Agreement.

FDIC and SIPC Considerations

Subject to the way each customer's Bank Account functions as a "zero-balance" account (as described above), funds in each customer’s Bank Accounts are aggregated with each other and with any other deposits a customer has with Jiko Bank and are Federal Deposit Insurance Corporation ("FDIC") - insured up to allowable limits according to the
rules of the FDIC, in the event Jiko Bank fails. Jiko Securities, Inc. is a member of the Securities Investor Protection Corporation (“SIPC”). SIPC protects client accounts against the loss of their securities in the event of the member’s insolvency and liquidation by replacing missing securities and cash up to a maximum of $500,000 per client, including $250,000 for claims for cash. SIPC does not protect customers against losses from changes in the market values of investments. For more information on SIPC coverage, please see
the explanatory brochure at http://www.sipc.org or contact SIPC at 202-371-8300.

Customer Protection Rule

The most important rule applicable to broker-dealers registered with the SEC is Rule 15c3-3 under the Securities Exchange Act (“SEA”). Rule 15c3-3 (sometimes called the “customer protection rule”) requires that broker-dealers safeguard customers’ “fully-paid” securities and cash held by the broker-dealer, and prohibits any use by the broker-dealer of such customer assets.

Rule 15c3-3(c)(5) under the SEA requires that a “segregated account” be established at a US bank custodian to hold securities for the benefit of customers of Jiko Securities, Inc., and, as a result, Jiko Securities, Inc. and BNY Mellon enter into a written agreement under which BNY Mellon acknowledges that (i) the assets in the account are for the benefit of the customers of Jiko Securities, Inc. and not for the benefit of Jiko Securities, Inc., (ii) BNY Mellon will release the assets in the account free of any demand of custodial fees or other amounts due from Jiko Securities, Inc.; and (iii) that neither BNY Mellon nor any person claiming through the custodian will have rights against the accounts.

Similarly, under Rule 15c3-3(e), the cash of Jiko customers will be held in the special reserve account for the exclusive benefit of Jiko customers at regulated partner banks or broker-dealers. Reserve calculations for customer assets are done weekly and stock records are WORM stored and accessible by FINRA.

The sum effect of the SEC regulations is that BNY Mellon should always hold, for the benefit of the customers of Jiko Securities, Inc., both government securities and cash in regulated accounts that are sufficient to satisfy all of Jiko’s customer obligations. In the case of a financial failure of Jiko Securities, Inc., the SEC or its delegate would take control of those accounts and oversee the prompt distribution to the customers of Jiko the government securities and cash held by BNY Mellon for the benefit of those customers.

For more information, see Jiko Commercial Brokerage Account Agreement.

Business Continuity Plans

Jiko’s Business Continuity Plan states:

“In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, depending on the scope and severity of the significant business disruption. Our business continuity plan addresses: data backup and recovery; all mission-critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank, and counterparty impact; regulatory reporting; and assuring our customers' prompt access to their funds and securities if we are unable to continue
our business. Our clearing firm backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by our clearing firm that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments within 24 hours. Orders and requests for funds and securities could be delayed during this period.”

If Jiko Securities, Inc., BNY Mellon, or MCNB were to fail, the securities in the customer omnibus account belong to Jiko customers because there is no-lien language on the account, and creditors of BNY Mellon, Jiko, or MCNB cannot access those securities. Each entity would continue operation after Chapter 11 bankruptcy to guarantee the proper liquidation of customer funds. Since assets belong to the customer, without credit exposure
and with a transparent chain of custody, liquidation, and settlement would occur on the standard timeline of T+1, barring a system failure (e.g. cyber issue).

Product and Technology Safety

Jiko Product Controls

Along with two-factor authentication, the Jiko Corporate product supports a Dual-Authorization Transfers feature, which allows customers to control the initiation of outgoing wire transfers with a two-part Maker-Checker system. A team member with Maker permissions creates the outgoing wire request, and a team member with Checker permissions can approve or deny the request.

The movement of funds in and out of Jiko is a tight closed loop; transfers are locked to the external bank accounts of the customer’s choosing for added security. Any manual errors made while managing funds on the Jiko Business Dashboard are limited to wiring between approved customer accounts.

Cybersecurity at Jiko

Jiko has achieved SOC 2 and PCI certifications and utilizes cloud-based infrastructure with robust data encryption. The SOC 2 certification validates the effectiveness of Jiko’s internal controls, safeguarding the security and privacy of customer information. Meanwhile, PCI certification ensures the secure handling of payment card data. Jiko’s lock-tight systems are monitored 24/7 by a dedicated team of security professionals.

Information Security

Jiko Group, Inc. employs strict WORM (Write Once, Read Many) storage standards according to SEC Rule 17a-4 and FINRA 10-06, 11-32, 11-39.

Jiko Securities, Inc. is a FINRA-registered broker-dealer, operating as a carrying firm, responsible for the accuracy of its books and records under rule 15c3-3. The firm has implemented controls around book entries and its books and records are reconciled daily by staff and automated processes, while also being audited weekly by an external party, which also runs the required reserve calculations. The firm’s stock records, as well as all communications, are preserved in WORM format and at WORM-certified storage solutions. The immutability of the entries as a result means that, irrespective of Jiko’s health, its regulators have, at any time the ability (under proper circumstances) to get an unmodified copy of Jiko’s books and records as of a specific day.

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1. Registration or oversight by these organizations does not imply a certain level of skill or training.