Twenty-four years ago, in 1997, the Securities & Exchange Commission (SEC) established a rule governing electronic recordkeeping. Watch the presentation or visit the blog at https://bit.ly/3mT4dqF

1. SEC UPDATES ITS ELECTRONIC
RECORDKEEPING RULE FOR
THE FIRST TIME IN 25 YEARS
Twenty-four years ago, in 1997, the Securities & Exchange Commission (SEC) established
a rule governing electronic recordkeeping

2. ELECTRONIC
RECORDKEEPING
POINTS FOR DISCUSSION
As described in the rule, is an audit-trail alternative and includes a broad definition. For
example, terms listed include modifications or deletions of a record, tracking all those
modifications such as the date and time when an operator creates, modifies, or deletes a
record plus details about that operator. Of course, there is a plethora of detail around
signatures and other data that uphold the authenticity and reliability of the record to permit
its recreation in its original form and all subsequent iterations of it.

3. One of the interesting aspects of this update is that it affords both the SEC and financial
firms benefits. Call it a rare win-win in the field of RegTech. Whenever technology can be
leveraged to simplify, streamline, and bolster compliance efforts that protect consumers –
and banks – from market fraud, it’s a good thing.
Keeping up with innovation is hardly a philosophy that you’d think a regulatory agency would
embrace. But that’s part of the impetus behind this rule update. Gary Gensler, Chair of the
SEC, articulated that this is precisely the path that the agency is following, “This proposal
would bring the Commission’s rule in line with technological innovation, and I am pleased to
support it.”
FIELD OF REGTECH

4. THREE KEY DRIVERS BEHIND THE
PROPOSED UPDATES
One, unsurprisingly, is to better facilitate examinations and investigations.
Two, to adopt a technology-neutral position that affords the agency with some
level of future-proofing. Specifically, it would reduce the need for rule revisions
each time that RegTech or data management technology introduces a new
format or approach.
And three, simply to improve electronic recordkeeping requirements.

5. WITH REGULATORS APPARENTLY
CRACKING DOWN
financial firms can begin preparing now for potential
inquiries from the SEC – and potential audits. Having your
records accessible on-demand, as per the requirements
of the SEC, is an essential component of contemporary
compliance stipulations. But the proposed changes
benefit financial firms, too: these proposed amendments
aren’t disproportionately in favor of the SEC.

6. PROPOSED MEASURES
financial institutions can further reduce their risk of
being exposed to market fraud. As market abusers use
increasingly sophisticated measures to evade detection,
these electronic recordkeeping rule updates mandate
that all transaction data be accessible which can
facilitate reduced risk. Leading RegTech solutions, like
our own here at Shield, rely on full access to all
electronic records to synthesize and analyze the history
of transactions. This is essential for the detection of
fraudulent activities which may have been conducted on
a collection of disparate devices in a concerted effort to
evade authorities.

7. TO
SUM
UP COST-SAVINGS IS A
LIKELY OUTCOME FOR
FIRMS
The proposed updates reduce the
redundancy of electronic recordkeeping.
Maintaining a hot copy for a shorter time
may further reduce costs. Another benefit is
online and collaborative file versioning.

8. HIGHLIGHTS
Compliance efforts are thwarted by their
reliance on different departments and different
job functions which each have a unique role in
data management. The proposed new rules infer
centralized access to all data forms which could
bolster internal (and external with authorities)
collaboration via streamlined access to
transactional data. Additional cost reductions
may be realized here.

9. REACH
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