Securities Transactions - Record Keeping

A broker-dealer must keep the following records for six years:

  • All receipts and disbursements of cash and all other debits and credits
  • Ledgers reflecting all assets, liabilities, capital, income and expenses
  • All purchases, sales, receipts and deliveries of securities and commodities for each account, and all other debits and credits to each account
  • A securities record or ledger reflecting positions carried on the broker-dealer's own account as well as those on its clients' accounts

Additionally, the broker-dealer must keep these records for three years:

  • All guarantees of accounts and all powers of attorney and other evidence of the granting of any discretionary authority, and copies of resolutions empowering an agent to act on behalf of a corporation
  • All repurchase and reverse repurchase agreements, and copies of all other debits and credits for securities, cash and other items for the broker-dealer's own account as well as for its clients' accounts

The NYSE requires its members to keep still more records for three years:

  • Every order transmitted from the member to the exchange floor
  • Every order received by the member either orally or in writing
  • Every order entered by the member into the Off-Hours Trading Facility
  • The time of the entry of every order cancellation

A broker-dealer has to maintain in perpetuity a file of customer complaints and their disposition.

Keeping Customer Accounts Up to Date
The broker-dealer must also transmit all pertinent account information to its customers. This means the broker-dealer needs to send out statements of account showing security and money positions and entries at least quarterly to all accounts having any kind of activity during the preceding quarter.

Also, the broker-dealer must send transaction confirmations to its customers, indicating settlement dates and the exchange on which the securities traded. Government securities are cleared through the FICC via Fedwire. Munis can be cleared in much the same way as equities, but can also be cleared with delayed delivery or other mutually agreeable terms. DKs go to arbitration.

Introduction
Related Articles
  1. Brokers

    Broker-Dealer Industry 101: The Landscape

    Independent broker-dealers are a great choice for experienced, self-starter planners who have established practices.
  2. Personal Finance

    RIAs and Brokers: What's the Difference?

    RIAs and brokers are held to different standards when providing investment advice. Here's how they differ.
  3. Trading Systems & Software

    Steps to Starting Up an Independent Broker Dealer

    Launching your own broker-dealer is a lot of work, but the potential payoff is great, both personally and financially.
  4. Professionals

    How To Answer Option Questions On The Series 7 Exam

    Learn how to answer option questions on the Series 7 exam. Pass your Series 7 exam with the help of these tips.
  5. Professionals

    Series 55

    FINRA Series 55 Exam Guide
  6. Professionals

    Series 62

    FINRA Series 62 Exam Guide
  7. Professionals

    Series 99

    FINRA/NASAA Series 99 Exam Guide
  8. Professionals

    Series 65

    FINRA/NASAA Series 65 Exam Guide
  9. Professionals

    Series 6

    FINRA Series 6 Exam Guide
  10. Professionals

    Series 66

    FINRA/NASAA Series 66 Exam Guide
RELATED TERMS
  1. No results found.
RELATED FAQS
  1. What are the differences between the Series 6 exam and the Series 7 exam?

    The Financial Industry Regulatory Authority (FINRA) offers a variety of licenses that must be obtained before conducting ... Read Full Answer >>
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!