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FINRA Proposes Custodial Recordkeeping Amendments

FINRA proposed to amend FINRA Rule 4570, which requires a broker-dealer that withdraws from SEC registration to designate a person to act as custodian of the firm's books and records. Currently, the custodian must be an individual associated with the firm at the time the broker-dealer withdraws from registration.

FINRA proposed to amend Rule 4570 to:

  • give the withdrawing firm the option to designate another FINRA member broker-dealer (e.g., an introducing firm's clearing broker) to act as custodian of its books and records after the firm withdraws from registration; and

  • clarify the responsibilities of the books and records custodian, including requiring the designated custodian to consent to the arrangement and file a notice with FINRA acknowledging its responsibilities.

Primary Sources

  1. FINRA: Proposed Rule Change Relating to FINRA Rule 4570 (Custodian of Books and Records) SR-2018-039

Tags

Regulated Activities
Registration Process
Regulated Entities
Broker-Dealers
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
FINRA / MSRB / SEC Exchanges / SIPC / Accountants
Sub-Author
FINRA