Toronto, ON, Dec. 17, 2012 — / — The D3P requirement outlined in 17a-3 and 17a-4 poses difficulty for small broker-dealer firms. They need to find a provider that offers a consolidated solution to help them successfully pass FINRA audits and keep the cost of compliance under control.

The all important books and records rule from the SEC, otherwise known as Rule 17a-3 and Rule 17a-4, specifies the minimum requirements that broker-dealers must take regarding the creation and retention of electronic records. The SEC requires that broker-dealers create and maintain certain records so that, among other things, they may conduct effective examinations of broker-dealers. Most broker-dealers fully understand this part of the rule, however a less fully understood aspect of the books and records rule is the designated third party downloader (D3P).

Essentially, the D3P means that the broker-dealer has assigned an independent third party who can give regulators direct access to their data during audits. But, achieving the D3P requirement can be confusing especially for small firms because of the different kinds of technology in place and gaining access to data can mean many different things. For example, the D3P can be a consulting firm who simply comes into the office every week and physically takes possession of a firm’s backup media such as CD’s DVD’s or tapes. In other cases, the D3P will be granted full access to the firm’s in-house backup systems and can restore data for regulators. However, in these cases firms will have to manage the backup process themselves but this is not an option for small firms because they don’t have the resources to build their own backup systems in-house. So the solution is to find a D3P who has the ability to perform all key requirements of 17a-3 and 17a-4 with the minimum amount of effort and cost on the part of the broker-dealer.

Using a Consolidated D3P Provider
Using a consolidate D3P is the best way for small broker-dealers to effectively achieve the D3P requirement. Essentially, a consolidated D3P has all the technology needed to achieve the main requirements of 17a-3 and 17a-4. This means they will have these four key features built into their solution:

Data backup: The D3P will take full responsibly of the broker-dealers data backup process and will make copies data contained in books and records such as word documents, scanned records, databases, as well as email and other communications

Transfer of data to a remote location: The D3P will have an automated process to easily transfer this data to a remote location so that the broker-dealer will have a separate secondary copy of their data in the event of a disaster

Long-term archiving of electronic records: The D3P will archive data up to seven years on non-rewriteable media (worm disk) so that it is always retained in its original format

Quick access to electronic records: Lastly, The D3P must be able to quickly reproduce current and historical electronic records for auditors in a format they can read

By choosing a consolidated D3P for their data archiving, small broker-dealers will have all the of key requirement of the 17a-3 and 17a-4 covered, while at the small time keeping costs under control by consolidate the entire process with one firm to manage their data compliance. But more importantly, they will easily pass SEC and FINRA electronic records request during audits to make sure they maintain the highest level of customer confidence at all times.

About AdvisorVault
AdvisorVault is the only designated third-party provider that has created a consolidate solution specifically for small broker-dealer firms. Customers using AdvisorVault pay one low monthly fee to ensure all critical electronic records are remotely backed up and archived for the required amount of time. In addition, AdvisorVault acts as its customer’s D3P to ensure this critical rule is met.

To request a demo of the solution, click here:

AdvisorVault Contact
Allan Lonz, President
AdvisorVault Inc.
Direct: 416-985-0310
Toll free 1-866-732-1407

Source: AdvisorVault



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