• Deborah

On October 12, the Securities and Exchanges Commission (SEC) adopted Rule Amendments to the electronic recordkeeping requirements under SEC Rule 17a-4, applicable to broker-dealers, as well as SEC Rule 18a-6, applicable to security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs) that are not registered as broker-dealers.


The amendments update the broker-dealer electronic recordkeeping rule, adopted in 1997 to consider the technological changes over the last two decades and to make the rules more technology neutral.


Summary of the Amendments

  • Addition of an audit-trail alternative to the existing requirement that broker-dealers preserve electronic records exclusively in a non-rewriteable, non-erasable format.

  • Requirement for nonbank SBSDs and MSBSPs preserve electronic records: (1) in a manner that meets the audit-trail requirement; or (2) exclusively in a non-rewriteable, non-erasable format.

  • Requirement for broker-dealers, SBSDs, and MSBSPs to produce electronic records in a reasonably usable electronic format to allow securities regulators to search and sort information on the records.

  • Requirements for broker-dealers to hire a third party with the ability to access the firm’s electronic records that undertakes to provide the records to securities regulators if the firm fails or is unable to do so with an alternative that a designated executive officer of the firm can undertake this responsibility.

  • Addition of a parallel third party or designated executive officer requirement to the SBSD and MSBSP electronic recordkeeping requirements rule.

  • Elimination of the requirement that a broker-dealer notify its designated examining authority before employing an electronic recordkeeping system.

  • Addition of an alternative approach to the undertaking that must be obtained from a third party that holds electronic records for a broker-dealer, SBSD, or MSBSP to accommodate the practice of using a recordkeeping service, including a cloud service provider, for this purpose.


The Rule Amendments become effective 60 days after publication in the Federal Register :

  • Broker-dealers will have to comply with the new requirements six months after publication in the Federal Register.

  • SBSDs and MSBSPs will have to comply with the new requirements twelve months after publication in the Federal Register.

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