FIA Works with Industry Coalition to Modernize SEC Record-Keeping Rule
On Nov. 14, five U.S. financial associations including FIA asked the Securities and Exchange Commission to update its broker-dealer electronic retention Rule 17a-4 by eliminating an obsolete recordkeeping requirement known as WORM (write once, read many) that was first put in place more than 20 years ago.
The associations explained that WORM systems are "costly, outmoded and inefficient storage containers" and warned that the requirement to use these systems is "measurably slowing" the industry's adoption of modern communication technologies.
The associations also asked the SEC to eliminate a requirement that broker-dealers hire a third party who has the ability to download information from their electronic storage systems. The associations said this requirement presents a "serious cybersecurity threat."
To replace these requirements, the associations proposed a rigorous retention standard that is technology-neutral and consistent with current business record management principles. The proposed amendments also would harmonize the SEC rules with the CFTC rules adopted in May 2017 that eliminated the WORM standard and third-party downloader requirements from CFTC requirements.
