SEC Extends Compliance Date for Certain Broker-Dealer Financial Responsibility Rule Amendments

The SEC approved an exemptive order providing a temporary exemption to broker-dealers from the requirements of recently adopted financial responsibility rules until March 3, 2014.

On July 30, 2013, the SEC voted to adopt amendments to the following Exchange Act regulations: Rule 15c3-1 ("Net Capital Requirements for Brokers or Dealers"), Rule 15c3-3 ("Customer Protection - Reserves and Custody of Securities"), Rule 17a-3 ("Records to Be Made by Certain Exchange Members, Brokers and Dealers"), Rule 17a-4 ("Records to Be Preserved by Certain Exchange Members, Brokers and Dealers") and Rule 17a-11 ("Notification Provisions for Brokers and Dealers"). The amendments are designed to address several areas of concern regarding the financial responsibility requirements for broker-dealers. The adopted release provided that the amendments would be effective on October 21, 2013.

This exemption order is issued in response to industry representatives notifying SEC staff that some broker-dealers will be unable to complete by that date the significant operational and systems changes necessary to comply with certain of the final rule amendments. Broker-dealers are temporarily exempt until March 3, 2014 from the requirements of the following new amendments:

• Rule 15c3-3, except paragraph (j)(1);
• Rule 15c3-3a;
• Rules 17a-3;
• Rule 17a-4; and
• paragraph (c)(2)(iv)(E)(2) of Rule 15c3-1.

Note: The SEC is not granting a temporary exemption from the remaining new requirements adopted in Exchange Act Release No. 70072: (1) the requirement in paragraph (j)(1) of Rule 15c3-3; (2) the new requirements in Rule 15c3-1 (other than the requirement in paragraph (c)(2)(iv)(E)(2) of Rule 15c3-1); (3) and the new requirements in Rule 17a-11. Broker-dealers have not identified these requirements as presenting a challenge in terms of achieving compliance by October 21, 2013. In addition, this temporary exemption does not apply to any other requirements in Rule 15c3-3, Rule 15c3-3a, Rule 17a-3, Rule 17a-4 or Rule 15c3-1.

See: SEC Exemptive Order.See also: 78 FR 51824. Related News: "SEC Publishes Two Final Rules Regarding Broker-Dealers (Fed. Reg.) (with Lofchie Comment)" (August 21, 2013).