The Securities Regulation Code requires that every Broker Dealer shall preserve for a period of not less than 5 years, the first 2 years in an easily accessible place, all books and records, including, but not limited to the following:
1. All records required under the Books and Records Rule;
2. All check books, bank statements and passbooks, cancelled checks and cash reconciliations;
3. All bills receivable or payable (or copies thereof), paid or unpaid, relating to the business of such Broker Dealer as such;
4. Originals of all communications received and copies of all communications sent by such Broker Dealer (including inter-office memoranda, e-mails and other communications) relating to his business as such;
5. All trial balances, computations of aggregate indebtedness and net capital (and working papers in connection therewith), financial statements, branch office reconciliations and internal audit working papers, relating to the business of such Broker Dealer;
6. All guaranteed accounts and all powers of attorney and other evidence of the granting of any discretionary authority given in respect of any account, and copies of resolutions empowering an agent to act on behalf of a corporation;
7. All written agreements (or copies thereof) entered into by such Broker Dealer relating to his business as such, including client agreements;
8. Records which contain the following information in support of amounts included in the report prepared as of the audit date in annual audited financial statements:
- i. Money balance and position, long or short, including description, quantity, price and valuation of each security, including contractual commitments in customer’s accounts, in cash and fully secured accounts, partly secured accounts, unsecured accounts and in securities accounts payable to customers;
- ii. Money balance and position, long or short, including description, quantity, price and valuation of each security, including contractual commitments in non-customers’ accounts, in cash and fully secured accounts, partly secured and unsecured accounts and in securities accounts payable to non-customers;
- iii. Money balance and position, long or short, including description, quantity, price and valuation of each security, including contractual commitments included in the computation of Risk Based Capital Adequacy (RBCA) Ratio as commitments, securities owned, securities owned not readily marketable, and other investments owned not readily marketable;
- iv. Amount of secured demand note, description of collateral securing such secured demand note including quantity, price and valuation of each security and cash balance securing such secured demand note;
- v. Number of shares, description of security, exercise price, cost and market value of put and call options including short out of the money, having no market or exercise value, showing listed and unlisted put and call options separately;
- vi. Quantity, price, and valuation of each security underlying the haircut for undue concentration made in the Computation for Net Capital;
- vii. Description, quantity, price, and valuation of each security or contractual commitment, long or short, in each joint account in which the Broker Dealer has an interest, including each participant’s interest and margin deposit;
- viii. Description, settlement date, contract amount, market price, and valuation for each aged failed to deliver requiring a charge in the Computation of Net Capital;
- ix. Detail of all items, not otherwise substantiated which are charged or credited in the Computation of Net Capital pursuant to the Net Capital Rule, such as cash margin deficiencies, deductions related to securities values and undue concentration, aged securities differences and insurance claims receivable; and
- x. Details relating to information for possession or control requirements and computations for determination of reserve requirements under the Rule on Customer Protection- Reserves and Custody of Securities.
- xi. A detailed description of the procedures which the Broker Dealer utilizes to comply with requirements set forth in “Annex E”.
OTHER RETENTION PERIODS
1. For a period of at least 5 years after the closing of any customer’s account, every Broker Dealer shall preserve the client agreement, account statement and any other records which relate to the terms and conditions with respect to the opening and maintenance of such account.
2. During the life of the enterprise and its successor, every Broker Dealer shall preserve all articles of incorporation or partnership articles, minute books and stock certificate books.
3. Every Broker Dealer shall maintain and preserve in an easily accessible place the pertinent records until at least 3 years after the associated person or salesman has terminated his employment and any other connection with the Broker Dealer.
4. In case of voluntary cessation or suspension of operations, every Broker Dealer hall preserve the records for a period of not less than 5 years. In case of voluntary suspension, the records shall be turned over to the SRO, which shall then maintain it for a period of not less than 5 years.
The records may be made or stored in easily-accessible electronic form and/or medium. If the records are prepared or maintained by an outside service/entity, such outside entity must submit a written undertaking to the effect that the records are the property of the Broker Dealer. When requested by the SEC or the SRO, every Broker Dealer shall promptly furnish legible, true and complete copies of the covered records.