29 Jun SEC Updates Filing Threshold to Rule 17h Reporting Requirements for Broker-Dealers
June 29, 2020 – SEC threshold unchanged since it was established in 1992, will exempt certain smaller broker-dealers from reporting requirements of Form 17-H filings per Rule 17h-1T, Rule 17h-2T. Modernized rules aim to enhanced efficiency and the efficacy of oversight for broker-dealers.
Follows recommendation of SEC Office of Inspector General, published earlier this year. Raising the reporting threshold increases the efficiency of the Form 17-H filing and review process. Reduced regulatory burden for smaller broker-dealers in a targeted, measured manner. Preserved reporting by firms representing 98% of the total capital of firms subject to 17h.
17h Rules set forth specified recordkeeping, reporting requirements for certain broker-dealers that are part of holding company structure, per Market Reform Act of 1990.
BDs that do not hold customer funds/securities owe money/securities to customers, or otherwise carry accounts of/for customers are exempt from the 17h Rules, provided that they maintain capital, including subordinated debt, of less than $20 million. Firms maintaining $50 million in the capital, including subordinated debt, currently account for 98% of the total capital of BDs subject to 17h Rules; continue to remain subject to rules.
SEC order updates threshold for the first time; exemption from 17h Rules for BDs with
the capital between $20-$50 million, so long as BD maintains less than $1 billion in total assets.
SEC exemptive order is effective immediately.
For more information, visit www.sec.gov