SEC Proposes Extending Broker Risk Management Record-Keeping
Published Date: 7/8/2025
Notice
Summary
Brokers and dealers who trade directly on exchanges or alternative systems must keep strong risk controls and regularly check they’re working well. They also need to keep records and have their CEO confirm yearly that everything’s up to snuff. The SEC is asking for comments to extend this rule, which helps keep trading safe without adding new costs or deadlines.
Analyzed Economic Effects
3 provisions identified: 0 benefits, 3 costs, 0 mixed.
Mandatory risk controls and CEO certification
If you are a broker or dealer with direct access to an exchange or an alternative trading system (ATS), Rule 15c3-5 requires you to implement, document, and preserve risk-management controls and supervisory procedures, regularly review and document those reviews, remediate issues, and have your Chief Executive Officer (or equivalent) certify annually that the rule was followed. Compliance with Rule 15c3-5 and the related recordkeeping consistent with Rule 17a-4 is mandatory for these broker-dealers.
Estimated internal compliance labor cost
The SEC estimates 500 broker-dealer respondents will each spend about 160 hours per year complying with Rule 15c3-5, totaling 80,000 hours annually. At an average internal cost of $447.92 per burden hour, the SEC estimates total internal labor costs of $35,833,500 per year for these respondents.
Estimated external hardware/software expense
The SEC estimates average annual external hardware and software costs of about $20,500 per broker-dealer to comply with Rule 15c3-5, which totals approximately $10,250,000 for the 500 affected broker-dealers. These are ongoing external technology costs the SEC included in its burden estimate.
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