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November 14, 2017 at 10:36 AM
Industry trade groups told the Securities and Exchange Commission Tuesday to update its broker-dealer electronic retention Rule 17a-4 by eliminating an outdated recordkeeping requirement known as WORM (write once, read many).
The trade groups — which include the Financial Services Institute, the Securities Industry and Financial Markets Association and the Financial Services Roundtable — proposed “a rigorous retention standard that is technology-neutral and consistent with current business record management principles.”
The amendments would also “harmonize the SEC rules with the correlating principles-based” Commodity Futures Trading Commission rules adopted in May, which eliminated the WORM standard and third-party downloader requirements from CFTC.
“The 20-year-old standards are outdated, costly and no longer effectively provide investor protections,” said Melissa MacGregor, SIFMA managing director and associate general counsel, in a statement.
“Updating the rule would align with the SEC’s fintech initiatives by fostering innovation and investor access to markets, as well as promoting the industry’s technological advancement and competitive opportunities,” MacGregor added. “In addition, harmonizing recordkeeping rules across the SEC and the CFTC would modernize electronic storage requirements.”
The groups argued in their letter to the SEC that WORM storage “is not an effective business continuity or cybersecurity defense tool because the nature of current complex records makes such use of the outdated technology impractical if not impossible.”
