Meet Financial Industry Records Preservation Rules Without Breaking the Bank

Jim Donovan
Jim Donovan
Senior Vice President, Product

The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) lay down strict rules for preserving financial, legal, and electronic trading records. Ensuring SEC and FINRA compliance can be a costly and complex undertaking, especially for boutique firms or newer firms with limited IT resources. In this blog, we’ll explain how Wasabi helps Proof, a new institutional equities broker, comply with SEC and FINRA records retention requirements without breaking the bank.

Traditional Cloud Records Archiving Solutions Cost a Pretty Penny

SEC Rule 17a-3 and Rule 17a-4 impose stringent recordkeeping guidelines for exchange members, brokers, and dealers. The rules define the types of records broker-dealers must save, the way the records must be stored, and how long the records must be kept. For example, Rule 17a-4 requires broker-dealers retain and index records in a non-rewriteable, non-erasable format for at least six years. FINRA refers to SEC Rule 17a-4 for its FINRA Rule 4511 books and records preservation requirements.

Historically, most financial services firms met SEC/FINRA regulations by archiving data to CDs or other physical media, and shipping them off-site for long-term retention. These days, many firms use cloud archival solutions to avoid physical media handling and distribution hassles. Cloud storage can help IT teams save time and effort by automating the entire archival process and eliminating manual intervention. Cloud storage also helps the environment by reducing material, packaging, and transportation waste. But traditional cold storage archival vendors like Iron Mountain and Patrina can charge high fees to retain and index data.

Wasabi Provides Affordable, Compliant Records Archiving

Proof is a new institutional broker-dealer focused on bringing a new level of transparency and execution quality to the equities market. The company is one of the first brokers to operate a low-latency institutional algorithmic trading platform in a public cloud. As a cost-conscious startup, Proof sought an economical, cloud-based records archival solution for its AWS-hosted equities execution platform.

After exploring a number of options, including Amazon S3 and Glacier cloud storage, Proof selected Wasabi hot cloud storage for long-term data retention. Wasabi serves as a secure, instantly and infinitely scalable archival storage tier for the company’s legal, financial, and electronic trading records. Wasabi’s low-cost, pay-as-you-grow pricing helps Proof minimize upfront investments and free up budget to focus on core business activities; the solution is a fraction of the price of conventional cold storage archival services from companies like Iron Mountain and Patrina.

Wasabi is engineered for extreme data durability and integrity, and helps Proof meet demanding SEC/FINRA records preservation requirements. The solution provides eleven 9s (99.999999999%) object durability, protecting archived data against hardware failures and media errors. And Wasabi’s data immutability capability protects against data manipulation or modification; an immutable object cannot be overwritten, deleted, or modified by anyone—including Wasabi personnel.

Wasabi is 100% AWS S3 bit-compatible and was easy for Proof to implement as part of a multicloud deployment; the firm quickly tied Wasabi into its tiered storage architecture using standard interfaces and utilities. Wasabi’s S3-compliant API simplifies AWS integration and lets Proof use their existing storage management tools.

Proof leverages a Designated Third Party to comply with SEC Rule 17a-4(f)(3)(vii) requirements. Designated Third Parties ensure authorities have access to records should a broker-dealer go out of business or refuse to cooperate with a regulatory inquiry.

The Results – Wasabi Reduces Compliance Cost and Complexity

Wasabi helps Proof preserve critical legal, financial, and electronic trading records, and mitigate regulatory risk, while minimizing IT expense and complexity. The solution helps Proof satisfy strict SEC and FINRA recordkeeping rules, while freeing up staff and budget to focus on innovation.

Next Steps

To learn how Wasabi can help your firm comply with SEC and FINRA recordkeeping rules without breaking the bank, read Wasabi’s SEC Compliance White Paper.

To learn more about how Wasabi helped Proof contain archival storage costs and reduce regulatory risk read the Proof case study.

Jim Donovan
Written By

Jim Donovan

Senior Vice President, Product