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Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Proposed Rules
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the broker-dealer must at all times have at least one senior officer who has independent access to and the ability to provide the records to the regulators, and that officer would need to execute the required undertakings. Independent access would mean the senior officer has the knowledge, credentials, and information necessary to access and provide the records without having to rely on other individuals at the firm.
Therefore, under the proposed rule, if the senior officer that executed the undertaking is unable or will no longer serve in that capacity at the firm, a different senior officer would have immediately to execute and deliver the undertaking. The objective is to have a senior officer at all times who can access and provide the records to the Commission and other securities regulators provide the undertaking. The Commission preliminarily believes this approach would address cybersecurity and trade secret concerns about requiring a third party to fulfill these responsibilities and, at the same time, provide the Commission and other securities regulators with a means to obtain records if the broker-dealer refuses to produce them in the normal course.
In this regard, the Commission is proposing to modify the first undertaking so that it is triggered if the broker-dealer fails to provide records and, if applicable, associated audit trails stored on the electronic recordkeeping system. As proposed, the senior officer would need to undertake to furnish promptly to the regulators, upon reasonable request, such information as is deemed necessary by the regulators, to download copies of a record and its audit trail if applicable kept by means of an electronic recordkeeping system by the broker-dealer into both a human readable format and a reasonably usable electronic format in the event of a failure on the part of the broker-dealer to download a requested record or its audit trail if applicable. This modification would be intended to limit the senior officers obligations to circumstances where employees or other officers of the broker-dealer are either unwilling or unable to access and download a requested record or its audit trail, when applicable. In the normal format or a reasonably usable electronic format and after reasonable notice to Name of the Member, Broker, or Dealer, the undersigned will download the record into a human readable format or a reasonably usable electronic format at the request of the staff of the staffs of the Commission, any selfregulatory organization of which Name of the Member, Broker, or Dealer is a member, or any State securities regulator having jurisdiction over Name of the Member, Broker, or Dealer.

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course, the Commission expects brokerdealers would produce the records to the regulators without the need of the seniors officers intervention.
The proposed amendments to Rule 18a6e would similarly require a senior officer of the SBS Entity, who has independent access to and the ability to provide the records, to execute undertakings consistent with the undertakings that would be required pursuant to Rule 17a4f, as proposed to be amended.87 However, the undertakings would need to be filed with the Commission rather than a DEA because SBS Entities do not have a DEA.
F. Requirements for Broker-Dealers Using Micrographic Media To Preserve Records As discussed above, the Commission believes most broker-dealers do not use micrographic media to preserve their records. However, because some brokerdealers may use this technology, the proposed amendments to Rule 17a4f would preserve this recordkeeping option for broker-dealers.88 The current requirements for broker-dealers using micrographic media are set forth in paragraphs f3i through iv of Rule 17a4, which also set forth requirements for broker-dealers using electronic storage media. As discussed above, paragraph f3 of Rule 17a4 would be amended to set forth requirements solely for broker-dealers using electronic recordkeeping systems.
Moreover, the current provisions of that paragraph would be modified to specifically address electronic recordkeeping systems. Consequently, they would not address the unique characteristics of micrographic media.
For these reasons, the Commission is proposing to move the requirements for broker-dealers using micrographic media to new paragraph f4 of Rule 17a4.
G. Requirement To Produce Electronic Records in a Reasonably Usable Electronic Format The Commission is also proposing to amend Rule 17a4j to require that a broker-dealer must furnish any record and its audit trail if applicable preserved electronically pursuant to Rule 17a4f in a reasonably usable electronic format, if requested by a representative of the Commission.89 As 87 See paragraph e3vii of Rule 18a6, as proposed to be amended.
88 See paragraph f4 of Rule 17a4, as proposed to be amended.
89 See paragraph j of Rule 17a4, as proposed to be amended. Paragraph j of Rule 17a4 requires, among other things, that a broker-dealer promptly
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discussed above, a reasonably usable electronic format would be a format that is common and compatible with commonly used systems for accessing and reading electronic records. The Commission similarly is proposing to amend Rule 18a6g to require SBS
Entities to furnish any record preserved electronically pursuant to Rule 18a6e in a reasonably usable electronic format, if requested by a representative of the Commission.90
III. Request for Comment The Commission is requesting comments from all members of the public on all aspects of the proposed amendments to Rules 17a4 and 18a6.
Commenters are requested to provide empirical data in support of any arguments or analyses. With respect to any comments, the Commission notes that they are of the greatest assistance to its rulemaking initiative if accompanied by supporting data and analysis of the issues addressed in those comments and by alternatives to the Commissions proposals where appropriate.
In addition to this general request for comment, the Commission is requesting comment on the following specific aspects of the proposals:
1. Is the proposal to replace the term electronic storage media in Rule 17a 4f and the term electronic storage media in Rule 18a6e with the term electronic recordkeeping system appropriate? 91 If so, explain why. If not, explain why not. Is there a more appropriate term? If so, identify it and explain why it would be more appropriate.
2. Is the definition of electronic recordkeeping system in Rules 17a4f and 18a6e, as proposed to be amended, appropriate? 92 If so, explain why. If not, explain why not. Is there a more accurate definition? If so, provide it and explain why it would be more accurate.
3. Is there a reason to retain the notification including the 90-day notification and representation requirements with respect to employing an electronic recordkeeping system in furnish to a representative of the Commission legible copies of records. Consequently, the rule already requires the broker-dealer to produce human readable copies of records.
90 Paragraph g of Rule 18a6 requires, among other things, that an SBS Entity promptly furnish to a representative of the Commission legible copies of records. Consequently, the rule already requires the broker-dealer to produce human readable copies of records.
91 See section II.A. of the release discussing these proposed amendments.
92 See section II.B. of the release discussing these proposed amendments.

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