Letters

SIFMA Submits Rulemaking Petition on SEC Electronic Recordkeeping Requirements

Summary

SIFMA, along with FIA, FSR, FSI, and ISDA, submitted a rulemaking petition to the SEC requesting amendments to Rule 17a-4(f) to no longer require broker-dealers to store records using the “write once, read many” WORM standard, to notify their designated examination authority of their intent to use electronic storage, to have an electronic records audit system, and to employ a third-party downloader.

See also: 
Petition for Rulemaking to Amend Exchange Act Rule 17a-4(f) – Addendum, May 24, 2018

Proposed Revisions to Rule 17a-4 of the Securities Exchange Act of 1934 – Mar. 23, 2007

PDF

Submitted To

SEC

Submitted By

SIFMA, FIA, FSR, FSI, and ISDA

Date

14

November

2017

Excerpt

November 14, 2017

Submitted via email: [email protected]

Brent J. Fields
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Re: Petition for Rulemaking to Amend Exchange Act Rule 17a-4(f)

Dear Mr. Fields,

The Securities Industry and Financial Markets Association (“SIFMA”)1, the Financial Services Roundtable (“FSR”)2, the Futures Industry Association (“FIA”)3, International Swaps and Derivatives Association (“ISDA”)4, and the Financial Services Institute 5 (together, the “Associations”) respectfully petition the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Rule 192(a) of the Commission’s Rules of Practice, to amend Rule 17a-4 under the Securities Exchange Act of 1934 (“Exchange Act”) (“Petition”). Specifically, the Associations request that the Commission amend Rule 17a-4(f) to no longer require brokerdealers to implement a “non-rewriteable, non-erasable” or “write once, read many” (“WORM”) standard, notify their designated examination authority of their intent to use electronic storage, have an electronic records audit system, and employ a third-party downloader. As described in more detail below, these 20-year old technology-specific rules are obsolete and measurably slowing the pace of securities firms’ adoption of communication technologies that investors are using and requesting.

In place of those outdated requirements, the Associations propose a rigorous retention standard that is technology-neutral and consistent with current approaches to managing and protecting data. A modernized rule will allow firms to take advantage of the most current information management technologies and more effectively secure regulatory records. This proposal would not otherwise affect the description or types of records required to be retained under the Exchange Act nor inhibit prompt access to such records by the SEC or other self regulatory organizations.6

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1 SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 FSR represents the largest integrated financial services companies providing banking, insurance, payment, investment, and finance products and services to the American consumer. FSR member companies provide fuel for America’s economic engine, accounting for $54 trilling in managed assets, $1.1 trillion in revenue and 2.1 million jobs. For more information, visit http://www.fsroundtable.org.

3 FIA is the leading trade organization for the global futures, options and over-the-counter cleared derivatives markets with offices in Washington, DC, London and Singapore. Its mission is to support open, transparent and competitive markets, protect and enhance the integrity of the financial system and promote high standards of professional conduct. FIA’s core constituency consists of firms registered with the Commodity Futures Trading Commission as futures commission merchants (FCM). Many of these FCMs are also registered as broker-dealers with the Securities and Exchange Commission. The primary focus of the association is the global use of exchanges, trading systems and clearing organizations for derivatives transactions. FIA’s members include clearing firms, exchanges, clearinghouses, trading firms and commodities specialists from more than 48 countries, as well as technology vendors, lawyers and other professionals serving the industry.

4 Since 1985, ISDA has worked to make the global derivatives markets safer and more efficient. Today, ISDA has over 875-member institutions from 68 countries. These members comprise a broad range of derivatives market participants, including corporations, investment managers, government and supranational entities, insurance companies, energy and commodities firms, and international and regional banks. In addition to market participants, members also include key components of the derivatives market infrastructure, such as exchanges, intermediaries, clearing houses and repositories, as well as law firms, accounting firms and other service providers. More information about ISDA and its activities is available on the Association’s website: www.isda.org.

5 The Financial Services Institute (FSI) is an advocacy association comprised of members from the independent financial services industry, and is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has been working to create a healthier regulatory environment for these members so they can provide affordable, objective financial advice to hard-working Main Street Americans. For more information, visit www.financialservices.org.

6 In any event, as noted below, we understand that regulators (including SEC and FINRA examiners and enforcement staff) do not typically require records to be produced from WORM storage because the information or data is not readily sortable or searchable.