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Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Proposed Rules paragraph f4 of Rule 17a4.169 Rule 18a6e does not provide for retaining records using micrographic media.
The proposed amendments to Rule 17a4f would eliminate a requirement that the broker-dealer notify its DEA
before employing an electronic recordkeeping system.170 Rule 18a6e currently does not have a similar DEA
notification requirement.
2. Proposed Amendments to Rules 17a 4j and 18a6g Rule 17a4j requires broker-dealers to furnish promptly to the Commission legible, true, complete, and current copies of those records of the firm that are required to be preserved under Rule 17a4 or any other record of the firm that is subject to examination under Section 17b of the Exchange Act.171
Rule 18a6g requires SBS Entities to furnish promptly to a representative of the Commission legible, true, complete, and current copies of those records of the firm that are required to be preserved under Rule 18a6, or any other records of the firm subject to examination or required to be made or maintained pursuant to Section 15F of the Exchange Act.172
The Commission is proposing to amend the prompt production of records requirements of Rules 17a4j and 18a6g.173 The proposed amendments to Rules 17a4j and 18a 6g would require a broker-dealer or SBS Entity, respectively, to furnish a record and its audit trail if applicable preserved on an electronic recordkeeping system pursuant to Rules 17a4f and 18a6e, respectively, in a reasonably usable electronic format, if requested by a representative of the Commission.174

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B. Proposed Use of Information The requirements of Rules 17a4 and 18a6, and the proposed amendments to these rules, are designed, among other things, to promote the prudent operation of broker-dealers and SBS
Entities and to assist the Commission, SROs, and state securities regulators in conducting effective examinations.175
169 See section II.F. of this release discussing these proposed amendments.
170 See section II.C. of this release discussing these proposed amendments.
171 See Rule 17a4j setting forth the prompt production of records requirements for brokerdealers; 15 U.S.C. 78qb.
172 See Rule 18a6g setting forth the prompt production of records requirements for SBS
Entities; 15 U.S.C. 78o10f.
173 See section II.G. of this release discussing these proposed amendments.
174 See Rule 17a4j and Rule 18a6g, as proposed to be amended.
175 See, e.g., Books and Records Requirements for Brokers and Dealers Under the Securities Exchange
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The proposed amendments to Rules 17a4j and 18ag are designed to facilitate examinations and other regulatory reviews by making them more efficient. Taken as a whole, the collections of information under the proposed amendments to Rules 17a 4f, 18a6e, 17a4j, and 18a6g would promote the prudent operation of broker-dealers and SBS Entities and facilitate the examinations of brokerdealers and SBS Entities by the Commission, SROs, and state securities regulators.
C. Respondents As of December 31, 2020, there were 3,551 broker-dealers registered with the Commission.176 As of November 9, 2021, 41 SBSDs have registered with the Commission, while no MSBSPs have registered with the Commission.177 Six of the SBSDs are existing broker-dealers or will be broker-dealers and, therefore, are included in the 3,551 broker-dealers.
Nine of the SBSDs are applying substituted compliance with respect to the requirements of Rule 18a6e.178
One SBSD is using the alternative compliance mechanism of Exchange Act Rule 18a10 and, therefore, is complying with the CFTCs recordkeeping rules.179 This leaves 25
SBSDs that are subject to Rule 18a6e and, therefore, would be subject to the proposed amendments to that rule.
Twenty-one of these SBSDs have a prudential regulator. This leaves four SBSDs that would be subject to paragraph e2 of Rule 18a6. Finally, 24 of the 25 SBSDs subject to Rule 18a 6e are also registered with the CFTC as swap dealers.
The following table summarizes the estimated number of respondents that would be subject to the amendments to Rule 17a4f and the number of SBSDs that would be subject to the amendments to Rule 18a6e and paragraph e2 of Rule 18a6.
Act of 1934, Exchange Act Release No. 44992 Oct.
26, 2001, 66 FR 55818 Nov. 2, 2001 The Commission has required that broker-dealers create and maintain certain records so that, among other things, the Commission, SROs, and State Securities Regulators . . . may conduct effective examinations of broker-dealers footnote omitted.
176 This estimate is derived from broker-dealer FOCUS filings as of December 31, 2020, as described in greater detail in the economic baseline, and is inclusive of five OTC derivatives dealers affected by the proposed amendments.
177 See List of Registered Security-Based Swap Dealers and Major Security-Based Swap Participants, available at: https www.sec.gov/tm/
List-of-SBS-Dealers-and-Major-SBS-Participants.
178 See Substituted Compliance Notices, available at: https www.sec.gov/tm/Substituted-complianceNotices.
179 See 17 CFR 240.18a10.

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Type of registrant Broker-dealers including SBSDs dually registered as broker-dealers
SBSDs that would be subject to Rule 18a6e as proposed to be amended
SBSDs that would be subject to Rule 18a6e2 as proposed to be amended ..

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Number
3,551
25
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Based upon the recent experience of the staff, the Commission estimates that approximately 95% of the brokerdealers, including broker-dealers that will be dually registered as SBS Entities, i.e., 3,373 broker-dealers use electronic recordkeeping systems; all of these firms are expected to continue to use electronic recordkeeping systems pursuant to the requirements of Rule 17a4f, as proposed to be amended.
The Commission believes that all SBSDs that are subject to Rule 18a6e 25
SBSDs use electronic recordkeeping systems pursuant to the requirements of Rule 18a6e and would continue to do so under the proposed amendments.
D. Total Initial and Annual Reporting Burdens 1. Proposed Amendments to Rules 17a 4f and 18a6e Rules 17a4f and 18a6e currently impose collection of information requirements that result in initial and annual time burdens for broker-dealers and SBSDs. The proposed amendments to these rules would both add to and decrease the current time burden estimates as explained below.
The proposed amendments to Rule 17a4f would provide an audit-trail alternative to the current WORM
requirement for electronic recordkeeping systems used by brokerdealers to meet the record preservation requirements of Rule 17a4.180
Consequently, broker-dealers could continue to meet the requirements of the rule by using a WORM-compliant electronic recordkeeping system they employ today. The amendments to Rule 18a6e would add a requirement that electronic recordkeeping systems used by nonbank SBSDs to comply with the record preservation requirements of Rule 18a6 must meet either the audittrail or WORM requirement.181
The Commission believes that few, if any, broker-dealers or nonbank SBSDs that use electronic recordkeeping systems are not currently compliant with the rules, as proposed to be amended, either because they currently 180 See section II.D. of this release discussing these proposed amendments.
181 Id.

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