In 1997, the Securities and Exchange Commission (SEC) issued Rule 17a-4(f), which authorized broker-dealers to store their required books and records in electronic format. Broker-dealers were required to retain their records with a Designated Third Party (D3P) so the SEC could review and audit the records at any point. In the event that the broker-dealer either goes out of business or refuses to cooperate with the SEC, the independent third party can assist in delivering the information.

In Section 17 CFR 240 17a-4)(f)(3)vii, the role of the designated third party (similar to the technical consultant rule with the CFTC) is addressed:

“For every member, broker, or dealer exclusively using electronic storage media for some or all of its record preservation under this section, at least one third party (“the undersigned”), who has access to and the ability to download information from the member’s, broker’s, or dealer’s electronic storage media to any acceptable medium under this section, shall file with the designated examining authority for the member, broker, or dealer the following undertakings with respect to such records.”

Click here to see what Iron Mountain is responsible for as a designated third party.