Under the present broker-dealer electronic recordkeeping rules, firms are required to preserve electronic records exclusively in a non-rewriteable, non-erasable format, which is known as the write once, read many format. The amendments will implement an audit-trail alternative that will ensure electronic records can be recreated if they are altered, over-written, or erased. This audit-trail approach should provide broker-dealers with greater flexibility in designing and implementing their electronic recordkeeping systems to align with current electronic recordkeeping practices while also protecting the authenticity and reliability of original records. The record-keeping amendments also apply to nonbank SBSDs and MSBSPs.

In addition to the audit-trail alternative, the amendments modify the rules by:

• Requiring that nonbank SBSDs and MSBSPs preserve electronic records
  1. in a manner that meets the audit-trail requirement
  2. exclusively in a non-rewriteable, non-erasable format
• Requiring that broker-dealers, SBSDs, and MSBSPs produce electronic records in a electronic format that will permit securities regulators to search and sort information
• Adding to the existing requirement that the firm hire a third party with the ability to access the firm’s electronic records that will provide the records to securities regulators if the firm fails or is unable to do so (a designated executive officer of the firm may also undertake this responsibility)
• Adding a parallel third party or designated executive officer requirement to the SBSD and MSBSP electronic recordkeeping requirements rule
• Removing a requirement stipulating that a broker-dealer notify its designated examining authority before implementing an electronic recordkeeping system
• Adding 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 final amendments will become effective 60 days after the date of publication of the adopting release in the Federal Register. For broker-dealers, the compliance dates for these new requirements will be six months after the date of publication of the adopting release in the Federal Register. For SBSDs and MSBSPs, the compliance date will be 12 months after the date of publication of said adopting release.

Source:

SEC Adopts Rule Amendments to Modernize How Broker-Dealers Preserve Electronic Records and Enhance the Electronic Recordkeeping Requirements for Security-Based Swap Entities (sec.gov)

Electronic Recordkeeping Requirements for Broker-Dealers, Security-Based Swap Dealers, and Major Security-Based Swap Participants (sec.gov)