Proposed Collection; Comment Request: Rule 15c6-2 (SEC seeks comments on „proposed collections“ in relation to its new rule to shorten the settlement cycle for security transactions)

In relation to its new rule to shorten the settlement cycle for securities transactions from two business days to one from May 28, 2024 (please see Event ID19797 for more information) , the SEC has now published in the Federal Register its „consultation“ on related „collection“ requirements, including policy creation, maintenance, or (other) recordkeeping obligations of covered firms as briefly discussed below.
To recall, new rule 17 CFR Part 240 § 240.15c6-2 under the Securities Exchange Act of 1934 aims to ensure that parties involved in institutional transactions, where broker-dealers or their customers need to engage with agents like investment advisers or securities custodians, can complete the allocation, confirmation, and affirmation process promptly and no later than the end of the trade date. In this context, in-scope broker-dealers must either enter into written agreements with their clients or draw up corresponding policies and procedures to
– identify and describe the technology systems, operations, and processes they use to coordinate with relevant parties such as investment advisers and custodians.
– set specific target time frames on the trade date for completing the allocation, confirmation, and affirmation process for the transaction.
– describe the steps they will take to ensure the prompt communication of trade information, investigate any discrepancies in trade information, and adjust trade information if necessary.
– outline how they plan to identify and address delays if other parties, such as investment advisers or custodians, are not promptly completing the allocation or affirmation for the transaction. Additionally, the broker-dealer must address delays that they might experience in promptly completing the confirmation process.
– measure, monitor, and document the rates of allocations, confirmations, and affirmations.
Additionally, broker dealers must maintain any written agreements for a minimum of three years at an easily accessible place.
As these activities fall under „collections“ for purposes of the „Paperwork Reduction Act of 1995“, the SEC must now consult on the „collection“. The consultation will be open for public comment up to September 22, 2023.