BD Recordkeeping Requirements

Overview

• Initial registration of a broker-dealer (or any other person) is only the starting point for regulatory compliance. To keep a registration effective, broker-dealers must meet ongoing obligations.
• One of the first requirements you’ll see in the Uniform Securities Act (USA) is recordkeeping:

“Every registered broker-dealer… shall make and keep such accounts, correspondence, memoranda, papers, books, and other records as the [Administrator] prescribes by rule or order”

🔑 Numbers & deadlines

Recordkeeping requirements

• In plain terms, broker-dealers must keep a reliable paper trail for nearly everything they do.

• These records matter because they may be needed later if a customer dispute, regulatory inquiry, or other liability issue comes up.
• 🔑 If jurisdiction exists, the state administrator may request and inspect any required records.

Definitions

Acceptable record formats

• State administrators also require records to be maintained in specific forms. Here’s the exact language from the applicable North American Securities Administrators Association (NASAA) recordkeeping rule:

“The records required to be maintained and preserved may be immediately produced or reproduced, and maintained and preserved for the required time [on]:

Paper or hard copy form, as those records are kept in their original form; or Micrographic media, including microfilm, microfiche, or any similar medium Electronic storage media, including any digital storage medium or system that meets the terms of this section.”

• Most firms now store records digitally (often in cloud-based systems). ⚠️ Even so, you’ll want to remember that paper records and older storage methods are still permitted under the rule.
• Historically, broker-dealers often used micrographic means of record retention, including microfilm and microfiche.

Indexing, production, and backups

• The same recordkeeping rule also requires broker-dealers to:

“Arrange and index the records in a way that permits easy location, access, and retrieval of any particular record; Provide promptly any of the following that the [Administrator] (by its examiners or other representatives) may request:

A legible, true, and complete copy of the record in the medium and format in which it is stored; A legible, true, and complete printout of the record; and Means to access, view, and print the records; and

Separately store, for the time required for the preservation of the original record, a duplicate copy of the record on any medium allowed by this section.”

• In basic terms, the broker-dealer must be able to locate records quickly, give the administrator access upon request, and provide copies in usable form. The firm must also keep a separate duplicate copy (a backup) for the required retention period.

Safeguarding records

• NASAA’s recordkeeping rules also require the broker-dealer to establish and maintain procedures:

“To maintain and preserve the records, so as to reasonably safeguard them from loss, alteration, or destruction, To limit access to the records to properly authorized personnel and the [Administrator] (including its examiners and other representatives), To reasonably ensure that any reproduction of a non-electronic original record on electronic storage media is complete, true, and legible when retrieved.”

Sidenote: Broker-dealer operations at financial institutions

• NASAA maintains a model rule for broker-dealers offering services at financial institutions.

• This type of arrangement is typically the result of a business relationship between a broker-dealer and a financial institution.
• Example: a local bank rents out a section of its office to a broker-dealer so the broker-dealer can offer securities to bank customers.
• The relationship is usually beneficial to both organizations: the bank earns revenue from the space, and customers gain access to additional financial products. The broker-dealer also benefits by gaining access to banking customers who may not otherwise seek out brokerage services.

🔑 The five requirements of the NASAA model rule

🔑 The “not-not-may” disclosures

Securities purchased or sold with the broker-dealer:

• 🔑 Federal Deposit Insurance Corporation (FDIC) insurance covers deposits of up to $250,000 per bank in the event of bank failure.

Public communications exceptions

• ⚠️ Not all communications must follow these requirements. In particular:

Key points

Post-registration obligations for broker-dealers

• Must maintain records of:
  • Accounts
  • Correspondence
  • Memoranda
  • Books and records
  • Any other record required by the administrator
• 3-year record maintenance requirement
  • Most recent 2 years must be readily available
• Records may be maintained through:
  • Paper or hard copy
  • Micrographic media
  • Digital storage

Broker-dealer operations at financial institutions

• BD operations must be separate from deposit area
• BD and financial institution agreement:
  • Must be in writing
  • Must allow BD supervisors & state administrator inspections
• Must provide not-not-may disclosure
  • BD products are not bank products
  • BD products are not FDIC insured
  • BD products may lose value
• Must disclose BD operations are separate in public communications
  • Unless radio ad 30 seconds or less or sign
• Must promptly notify financial institution if BD agent is terminated

Sources

Primary/official references for the material in this chapter. Every link was fetched and returned HTTP 200 on 2026-08-15.