All broker dealers are required to prepare and maintain reports and records according to industry regulations. The content and timing of the reports depends on the nature of the report. SEC Rule 17 a-3 sets forth the requirements for broker dealer reporting, timing, and content. SEC Rule 17 a-4 sets the retention requirements for those records. Records subject to these rules must be maintained anywhere from three years to the life of the firm. Records that are required to be maintained must be readily accessible for the first two years.
Under SEC Rule 17a-3 a significant number of records must be filed and maintained by broker dealers. The following is a list of those records and their definitions:
Blotters are records of original entry and must reflect transactions as of the trade date. Blotters must be prepared no later than the following business day, or T + 1. This would include a historical account of all the daily transactions, such as:
The general ledger reflects the firm's assets, liabilities, income, and expenses and capital accounts. The firm's trial balance and other financial reports can be prepared from this to show the broker dealer's financial condition. It must be prepared monthly.
Customer accounts are itemized records of each cash and margin account for each customer. This reflects all purchases, sales, receipts, and deliveries of cash and securities for each customer as well as the new account form and margin agreement, if applicable.
A securities position book or stock record is a record of the long and short position in each security, whether carried for the account of the broker dealer or for the account of a customer. The location of these securities must also be maintained.
An order ticket also known as an order memorandum is a record detailing the terms and conditions of an order to purchase or sell a security. Records must be maintained whether or not the order is executed.
A confirmation is a notice of the terms and conditions of an executed order. Copies of all confirmations and notices of other debits and credits must be maintained.
Monthly trial balances and net capital computations serve as a check on the current status and accuracy of the firm's ledger account and financial condition. Firms are required to file their net capital computations with regulators via the FOCUS form.
A copy of the registration application or U4 form will suffice as an employment application. Applications must be approved in writing by an authorized representative of the member.
The following is a list or records that must be maintained by the firm for three years:
The following is a list of records that must be maintained by the firm for six years:
The following records must be maintained for the life of the firm: