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Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Proposed Rules
Entities, the regulatory baseline includes the statutory provisions pursuant to the Dodd-Frank Act and rules adopted by the Commission, compliance with which is required.
This includes rules adopted by the Commission in the following adopting releases: The intermediary definitions release; 111 cross-border release; 112
security-based swap entity registration release; 113 U.S. activity release; 114
business conduct release; 115 trade acknowledgment release; 116 capital, margin, and segregation release; 117 and the recordkeeping and reporting release adopting Rules 18a6e and g.118
The following sections discuss available data about the security-based swap market, affected SBS Entities, dual registrants, other security-based swap market participants, participant domiciles, and broker dealer activity.

1. Broker-Dealers The market for broker-dealer services encompasses a relatively small set of large and medium sized broker-dealers and thousands of smaller broker-dealers competing for niche or regional segments of the market.119 The market for broker-dealer services includes many different markets for a variety of services related to the securities business, including 1 managing orders for customers and routing them to various trading venues; 2 providing advice to customers that is in connection with and reasonably related to their primary business of effecting securities transactions; 3 holding customers funds and securities; 4
handling clearance and settlement of trades; 5 intermediating between customers and carrying/clearing brokers; 6 dealing in corporate debt and equities, government bonds, and municipal bonds, among other
securities; 7 privately placing securities; and 8 effecting transactions in mutual funds that involve transferring funds directly to the issuer.
Some broker-dealers may specialize in just one narrowly defined service, while others may provide a wide variety of services.
Based on an analysis of FOCUS filings as of December 2020, there were approximately 3,551 registered brokerdealers with over 186 million customer accounts.120 In total, these brokerdealers have over $5 trillion in total assets as reported on Form X17A5.121
More than two-thirds of all brokerdealer assets and more than one-third of all customer accounts are held by the 19
largest broker-dealers, as shown in Table 1.122 Of the broker-dealers registered with the Commission as of December 2020, 502 broker-dealers were dually registered as investment advisers.123

TABLE 1REGISTERED BROKER-DEALERS AS OF DECEMBER 2020
Size of broker-dealer total assets
Total number of BDs
Number of dually registered BDs

Cumulative total assets $ bln
Cumulative number of customer accounts
>$50 billion
$1 billion to $50 billion
$500 million to $1 billion
$100 million to $500 million
$10 million to $100 million
$1 million to $10 million <$1 million

19
122
25
129
507
1,047
1,702

10
24
5 31
98
194
140

3,450
1,519
17
27
18
3.7
0.5

67,178,360
107,003,611
639,425
932,529
9,771,667
383,646
13,481

Total

3,551

502

5,036

185,922,719

lotter on DSK11XQN23PROD with PROPOSALS2

For purposes of this table, a dually registered broker-dealer is registered with either the Commission or a state as an investment adviser and a broker-dealer.

The Commission preliminarily estimates that 45 broker-dealers may be dually registered with the CFTC as
futures commission merchants as of December 31, 2020.124

In addition to the above estimates of affected broker-dealers, over-the-counter OTC derivatives dealers will also be
requirement as set forth in the text of paragraph f2iiA of Rule 17a4 was interpreted by the Commission in 2019 and 2003.
111 See Further Definition of Swap Dealer, Security-Based Swap Dealer, Major Swap Participant, Major Security-Based Swap Participant and Eligible Contract Participant, Exchange Act Release No. 66868 Apr. 27, 2012, 77
FR 30596 May 23, 2012.
112 See Application of Security-Based Swap Dealer and Major Security-Based Swap Participant Definitions to Cross-Border SecurityBased Swap Activities, Exchange Act Release No.
72372 June 25, 2014, 79 FR 47278, 47359 Aug. 12, 2014.
113 See Registration Process for Security-Based Swap Dealers and Major Security-Based Swap Participants, Exchange Act Release No. 75611 Aug.
5, 2015, 80 FR 48964, 48989 Aug. 14, 2015.
114 See Security-Based Swap Transactions Connected With a Non-U.S. Persons Dealing Activity That Are Arranged, Negotiated, or Executed by Personnel Located in a U.S. Branch or Office of an Agent; Security-Based Swap Dealer De Minimis Exception, Exchange Act Release No.
77104 Feb. 10, 2016, 81 FR 8598 Feb. 19, 2016.

115 See Business Conduct Standards for SecurityBased Swap Dealers and Major Security-Based Swap Participants, Exchange Act Release No. 77617
Apr. 14, 2016, 81 FR 29960, 30081 May 13, 2019.
116 See Trade Acknowledgment and Verification of Security-Based Swap Transactions, Exchange Act Release No. 78011 June 8, 2016, 81 FR 39808, 3014344 June 17, 2016.
117 See SBSD/MSBSP Capital, Margin, and Segregation Adopting Release, 84 FR 43872.
118 See SBSD/MSBSP Recordkeeping Proposing Release, 84 FR 68550.
119 See Regulation Best Interest Adopting Release, 84 FR at 33406. For simplification, the Commission presents this analysis as if the market for brokerdealer services encompasses one broad market with multiple segments, even though, in terms of competition, it could also be discussed in terms of numerous interrelated markets.
120 The data is obtained from FOCUS filings as of December 2020. There may be a double-counting of customer accounts among, in particular, the larger broker-dealers as they may report introducing broker-dealer accounts as well in their role as clearing broker-dealers. Customer Accounts
includes both broker-dealer and investment adviser accounts for dual-registrants.
121 Assets are estimated by Total Assets allowable and non-allowable from Part II of the FOCUS filings Form X17A5 Part II and Part IIA, available at https www.sec.gov/files/formx-17a-5_
2.pdf and correspond to balance sheet total assets for the broker-dealer. The Commission does not have an estimate of the total amount of customer assets for broker-dealers because that information is not included in FOCUS filings. The Commission estimates broker-dealer size from the total balance sheet assets as described above.
122 Approximately $4.97 trillion of total assets of broker-dealers 98.7% are at broker-dealers with total assets in excess of $1 billion.
123 This estimate includes the number of brokerdealers who are also registered as state investment advisers.
124 Using FOCUS Report data as of December 31, 2020, there are 45 broker-dealers that report commodity futures account activity in Part II:
Customers Regulated Commodity Futures Accounts.

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