Ohio Administrative Code › Title 1301:6 - Division of Securities › Chapter 1301:6-3 - Registration of Securities; Licensing › Section 1301:6-3-14.2 - Dealers not required under federal law or the law of this state to be registered as a broker or dealer with the securities and exchange commission

Current through all regulations passed and filed through July 1, 2024
(A) Pursuant to
			 division (C) of section
			 1707.142 of the Revised Code, a
			 dealer that is not required under federal law or the law of this state to
			 register as a broker or dealer with the securities and exchange commission may
			 elect to comply with paragraphs (B) to (M) of this rule in lieu of requirement
			 contained in section 15 of the Securities and Exchange Act of 1934, 48 Stat.
			 881,
			 15 U.S.C.
			 78o, as amended, section 17 of the Securities
			 and Exchange Act of 1934, 48 State 881,
			 15 U.S.C.
			 78q, as amended, and rules of the securities
			 and exchange commission promulgated under those sections.
(B) As used in this rule:
"Dealer" shall mean a dealer licensed by the division that is
				not required under federal law or the law of this state to be registered as a
				broker or dealer with the securities and exchange commission.
(C) Records of dealer
(1) Every dealer licensed in this state shall
			 promptly furnish to the division, upon request by the division, legible, true
			 and complete copies of the records required to be preserved and retained
			 pursuant to this rule. The division, in its discretion, may examine the books
			 and records of any licensed dealer or any applicant for a dealer's license.
(2) Every licensed dealer shall
			 preserve and retain for a period of not less than three years, the first two
			 years in an accessible place:
(a) All check
			 books, bank statements, cancelled checks and cash reconciliations;
(b) All bills receivable or payable, or
			 copies thereof, paid or unpaid, relating to the business of the dealer;
(c) Originals of all
			 communications received and copies of all communications sent by the dealer,
			 including interoffice memoranda and communications, relating to the dealer's
			 business and all communications which are subject to rules of a self regulatory
			 organization of which the dealer is a member regarding communications with the
			 public. As used in this paragraph, the term "communications" includes sales
			 scripts;
(d) All trial balances,
			 computations of aggregate indebtedness and net capital and working papers in
			 connection therewith, financial statements, branch office reconciliations, and
			 internal audit working papers, relating to the business of the dealer;
(e) All guarantees of accounts and
			 all powers of attorney and other evidence of the granting of any discretionary
			 authority given in respect of any account, and copies of resolutions empowering
			 an agent to act on behalf of a corporation;
(f) All written agreements or copies thereof
			 entered into by the dealer relating to its business, including agreements with
			 respect to any account;
(g) For
			 those dealers affiliated with a self-regulatory organization, records that
			 contain the following information in support of amounts included in the form
			 X-17A-5, "Financial and Operational Combined Uniform Single Report," part II,
			 part IIA, part IIB, part III and applicable schedules filed by dealers subject
			 to any minimum net capital requirement set forth in 17 C.F.R. 240.15 c3-1, as
			 amended;
(i) Money balance and security
			 position, long or short, including description, quantity, price and valuation
			 of each security including contractual commitments in customers' accounts, in
			 cash and fully secured accounts, partly secured accounts, unsecured accounts,
			 and in securities accounts payable to customers;
(ii) Money balance and security position,
			 long or short, including description, quantity, price and valuation of each
			 security including contractual commitments in non-customers' accounts, in cash
			 and fully secured accounts, partly secured and unsecured accounts, and in
			 securities accounts payable to non-customers;
(iii) Position, long or short, including
			 description, quantity, price and valuation of each security including
			 contractual commitments included in the computation of net capital as
			 commitments, securities owned, securities owned not readily marketable, and
			 other investments owned not readily marketable;
(iv) Amount of secured demand note,
			 description of collateral securing the demand note including quantity, price
			 and valuation of each security and cash balance securing the demand note;
(v) Description of futures
			 commodity contracts, contract value on trade date, market value, gain or loss,
			 and liquidating equity or deficit in customers' and non-customers' accounts;
(vi) Description of futures
			 commodity contracts, contract value on trade date, market value, gain or loss
			 and liquidating equity or deficit in trading and investment accounts;
(vii) Description, money balance,
			 quantity, price and valuation of each spot commodity position or commitments in
			 customers' and non-customers' accounts;
(viii) Description, money balance, quantity,
			 price and valuation of each spot commodity position or commitments in trading
			 and investment accounts;
(ix)
			 Number of shares, description of security, exercise price, cost and market
			 value of put and call options including short out of the money options having
			 no market or exercise value, showing listed and unlisted put and call options
			 separately;
(x) Quantity, price,
			 and valuation of each security underlying the haircut for undue concentration
			 made in the computation for net capital;
(xi) Description, quantity, price and
			 valuation of each security and commodity position or contractual commitment,
			 long or short, in each joint account in which the dealer has an interest,
			 including each participant's interest and margin deposit;
(xii) Description, settlement date, contract
			 amount, quantity, market price, and valuation for each aged failed to deliver
			 requiring a charge in the computation of net capital;
(xiii) Detail relating to information for
			 possession or control requirements under 17 C.F.R. 240.15 c3-3, as amended, and
			 reported on the schedule in part II or part IIA of form X-17A-5;
(xiv) Detail of all items, not otherwise
			 substantiated, which are charged or credited in the computation of net capital
			 including cash margin deficiencies, deductions related to securities values and
			 undue concentration, aged securities differences and insurance claims
			 receivable; and
(xv) Other
			 information or records specifically prescribed by the division.
(h) Dealers having physical
			 possession or control of fully paid and excess margin securities shall prepare
			 and maintain a current and detailed description of the procedures used to
			 comply with the possession or control requirements set forth in this rule.
(i) Internal risk management
			 control systems for OTC derivatives dealers.
(i) An OTC derivatives dealer shall
			 establish, document, and maintain a system of internal risk management controls
			 to assist it in managing the risks associated with its business activities,
			 including market, credit, leverage, liquidity, legal, and operational risks.
(ii) An OTC derivatives dealer
			 shall consider the following when adopting its internal control system
			 guidelines, policies, and procedures:
(a) The
			 ownership and governance structure of the OTC derivatives dealer;
(b) The composition of the governing body of
			 the OTC derivatives dealer;
(c)
			 The management philosophy of the OTC derivatives dealer;
(d) The scope and nature of established risk
			 management guidelines;
(e) The
			 scope and nature of the permissible OTC derivatives activities;
(f) The sophistication and experience of
			 relevant trading, risk management, and internal audit personnel;
(g) The sophistication and functionality of
			 information and reporting systems; and
(h) The scope and frequency of monitoring,
			 reporting, and auditing activities.
(iii) An OTC derivatives dealer's internal
			 risk management control system shall include the following elements:
(a) A risk control unit that reports directly
			 to senior management and is independent from business trading units;
(b) Separation of duties between personnel
			 responsible for entering into a transaction and those responsible for recording
			 the transaction in the books and records of the OTC derivatives dealer;
(c) Periodic reviews that may be
			 performed by internal audit staff and annual reviews that must be conducted by
			 independent certified public accountants of the OTC derivatives dealer's risk
			 management systems;
(d)
			 Definitions of risk, risk monitoring, and risk management; and
(e) Written guidelines, approved by the OTC
			 derivatives dealer's governing body, that include and discuss the following:
(i) The OTC derivatives dealer's
			 consideration of the elements in paragraph (C)(2)(i)(ii) of this rule;
(ii) The scope, and the procedures
			 for determining the scope, of authorized activities or any non-quantitative
			 limitation on the scope of authorized activities;
(iii) Quantitative guidelines for managing
			 the OTC derivatives dealer's overall risk exposure;
(iv) The type, scope, and frequency of
			 reporting by management on risk exposures;
(v) The procedures for and the timing of the
			 governing body's periodic review of the risk monitoring and risk management
			 written guidelines, systems, and processes;
(vi) The process for monitoring risk
			 independent of the business or trading units whose activities create the risks
			 being monitored;
(vii) The
			 performance of the risk management function by persons independent from or
			 senior to the business or trading units whose activities create the risks;
(viii) The authority and resources
			 of the groups or persons performing the risk monitoring and risk management
			 functions;
(ix) The appropriate
			 response by management when internal risk management guidelines have been
			 exceeded;
(x) The procedures to
			 monitor and address the risk that an OTC derivatives transaction contract will
			 be unenforceable;
(xi) The
			 procedures requiring the documentation of the principal terms of OTC
			 derivatives transactions and other relevant information regarding such
			 transactions;
(xii) The procedures
			 authorizing specified employees to commit the OTC derivatives dealer to
			 particular types of transactions;
(xiii) Any other procedures or steps taken to
			 prevent the OTC derivatives dealer from engaging in any securities transaction
			 that would cause it to violate laws to which it is subject; and
(xiv) The procedures to prevent the OTC
			 derivatives dealer from improperly determining whether a counterparty is acting
			 in the capacity of principal or agent.
(iv) Management must periodically review, in
			 accordance with written procedures, the OTC derivatives dealer's business
			 activities for consistency with risk management guidelines including that:
(a) Risks arising from the OTC derivatives
			 dealer's OTC derivatives activities are consistent with prescribed guidelines;
(b) Risk exposure guidelines for
			 each business unit are appropriate for the business unit;
(c) The data necessary to conduct the risk
			 monitoring and risk management function as well as the valuation process over
			 the OTC derivatives dealer's portfolio of products is accessible on a timely
			 basis and information systems are available to capture, monitor, analyze, and
			 report relevant data;
(d)
			 Procedures are in place to enable management to take action when internal risk
			 management guidelines have been exceeded;
(e) Procedures are in place to monitor and
			 address the risk that an OTC derivatives transaction contract will be
			 unenforceable;
(f) Procedures are
			 in place to identify and address any deficiencies in the operating systems and
			 to contain the extent of losses arising from unidentified deficiencies;
(g) Procedures are in place to
			 authorize specified employees to commit the OTC derivatives dealer to
			 particular types of transactions, to specify any quantitative limits on such
			 authority, and to provide for the oversight of their exercise of such
			 authority;
(h) Procedures are in
			 place to prevent the OTC derivatives dealer from engaging in any securities
			 transaction that is not permitted under the laws to which the OTC derivatives
			 dealer is subject;
(i) Procedures
			 are in place to prevent the OTC derivatives dealer from improperly determining
			 whether a counterparty is acting in the capacity of principal or agent;
(j) Procedures are in place to
			 provide for adequate documentation of the principal terms of OTC derivatives
			 transactions and other relevant information regarding such transactions;
(k) Personnel resources with
			 appropriate expertise are committed to implementing the risk monitoring and
			 risk management systems and processes; and
(l) Procedures are in place for the periodic
			 internal and external review of the risk monitoring and risk management
			 functions.
(j) All notices relating to an internal
			 dealer system provided to the customers of the dealer that sponsors the
			 internal dealer system. Notices, whether written or communicated through the
			 internal dealer trading system or other automated means, shall be preserved
			 under this rule if they are provided to all customers with access to an
			 internal dealer system, or to one or more classes of classes of customers.
(3) Every dealer
			 subject to this rule shall preserve and retain for a period of not less than
			 six years after closing any customer's account any account cards or records
			 which relate the terms and conditions with respect to the opening and
			 maintenance of the account.
(4)
			 Every dealer subject to this rule shall preserve and retain during the life of
			 the enterprise and of any successor enterprise, all organizational documents of
			 the enterprise including partnership agreements, articles of incorporation or
			 charters, articles of organization, minute books and stock certificate books,
			 all forms BDW, all amendments to the foregoing forms, and all documentation
			 showing the licensure of the dealer with any regulatory authority.
(5) Each report that any securities regulator
			 has requested or required the dealer to make and furnish to the securities
			 regulator pursuant to an order or settlement, and each securities regulatory
			 examination report shall be retained by the dealer until three years after the
			 date of the report.
(6) Each
			 compliance, supervisory, and procedures manual, including any updates,
			 modifications, and revisions to the manual, describing the policies and
			 practices of the dealer with respect to compliance with applicable laws and
			 rules, and supervision of the activities of each natural person employed by or
			 associated with the dealer shall be retained by the dealer until three years
			 after the termination of the use of the manual.
(7) All reports produced to review for
			 unusual activity in customer accounts shall be retained by the dealer until
			 eighteen months after the date the report was generated. In lieu of maintaining
			 the reports, a dealer may produce promptly the reports upon request by the
			 division. If a report was generated in a computer system that has been changed
			 in the most recent eighteen month period in a manner such that the report
			 cannot be reproduced using historical data in the same format as it was
			 originally generated, the report may be produced by using the historical data
			 in the current system, but must be accompanied by a record explaining each
			 system change that affected the reports. If a report is generated in a computer
			 system that has been changed in the most recent eighteen month period in a
			 manner such that the report cannot be reproduced in any format using historical
			 data, the dealer shall promptly produce upon a request a record of the
			 parameters that were used to generate the report at the time specified by the
			 division, including a record of the frequency with which the report or reports
			 were generated.
(8) The records
			 required to be maintained and preserved pursuant to this rule may be
			 immediately produced or reproduced on microfilm, microfiche or any similar
			 medium, or by means of any digital storage medium or system that meet the
			 conditions set forth in this rule and be maintained and preserved for the
			 required time in that form.
(a) If a digital
			 storage medium or system is used by a dealer, the dealer shall comply with the
			 following requirements:
(i) Upon request by
			 the division, the dealer must be able to provide its own representation or one
			 from the storage medium vendor or other third party with appropriate expertise
			 that the selected storage media meets these conditions. The electronic storage
			 media must:
(a) Preserve the records
			 exclusively in a non-rewriteable, non-erasable format;
(b) Verify automatically the quality and
			 accuracy of the storage media recording process;
(c) Serialize the original and, if
			 applicable, duplicate units of storage media, and time-date for the required
			 period of retention, the information placed on such electronic storage media;
			 and
(d) Have the capacity to
			 readily download indices and records preserved on the electronic storage media
			 to any medium acceptable to the division.
(ii) Verify automatically the quality and
			 accuracy of the storage media recording process;
(iii) Serialize the original and, if
			 applicable, duplicate units of storage media, and time-date for the required
			 period of retention, the information placed on such electronic storage media;
			 and
(iv) Have the capacity to
			 readily download indices and records preserved on the electronic storage media
			 to any medium acceptable to the division.
(b) If digital storage medium or system or
			 microfilm, microfiche or similar medium is used by a dealer, the dealer shall:
(i) At all times have available, for
			 examination by the division, facilities for immediate, easily readable
			 projection or production of microfilm, microfiche or similar medium or digital
			 storage medium images and for producing easily readable images;
(ii) Be ready at all times to provide, and
			 immediately provide, any facsimile enlargement which the division may request;
(iii) Store separately from the
			 original, a duplicate copy of the record stored on any medium for the time
			 required;
(iv) Organize and index
			 accurately all information maintained on both original and any duplicate
			 storage media. At all times, a dealer must be able to have indices available
			 for examination by the division. Each index must be duplicated and the
			 duplicate copies must be stored separately from the original copy of each
			 index. Original and duplicate indices must be preserved for the time required
			 for the indexed records;
(v) The
			 dealer must have in place an audit system providing for accountability
			 regarding inputting of records required to be maintained and preserved pursuant
			 to this rule to digital storage media and inputting any changes made to every
			 original and duplicate record maintained and preserved. At all times, a dealer
			 must be able to have the results of the audit system available for examination
			 by the division. The audit results must be preserved for the time required for
			 the audited records;
(vi) The
			 dealer must maintain, keep current, and provide promptly upon request by the
			 division all information necessary to access records and indices stored on the
			 electronic storage media; or place in escrow and keep current a copy of the
			 physical and logical file format of the electronic storage media, the field
			 format of all different information types written on the electronic storage
			 media and the source code, together with the appropriate documentation and
			 information necessary to access records and indices; and
(vii) For every dealer exclusively using
			 electronic storage media for some or all of the dealer's record preservation
			 under this rule, at least one third party who has access to and the ability to
			 download information from the dealer's electronic storage media to any
			 acceptable medium under this rule, shall file with the division an undertaking
			 to promptly furnish to the division, upon reasonable request, information as is
			 deemed necessary by the division to download information kept on the dealer's
			 electronic storage media to any medium acceptable to the division, and to take
			 reasonable steps to provide access to information contained on the dealer's
			 electronic storage media, including arrangements for the downloading of any
			 record required to be maintained and preserved by the dealer by this rule. Such
			 arrangements will provide specifically that in the event of a failure on the
			 part of a dealer to download the record into a readable format and after
			 reasonable notice to the dealer, upon being provided with the appropriate
			 electronic storage medium, the undersigned will undertake to do so, as the
			 division may request.
(9) If a person who has been subject to this
			 rule ceases to transact a business in securities directly with others than
			 members of a national securities exchange or ceases to transact a business in
			 securities through the medium of a member of a national securities exchange,
			 the person shall, for the remainder of the periods of time specified in this
			 section, continue to preserve the records which he theretofore preserved
			 pursuant to this rule.
(10) For
			 purposes of transactions in municipal securities by municipal securities
			 dealers, compliance with rule G-9 of the "Municipal Securities Rulemaking
			 Board" as amended, will be deemed to be compliance with this rule.
(11) If the records required to be maintained
			 and preserved pursuant to this rule are prepared or maintained by an outside
			 service bureau, depository, bank which does not operate pursuant to paragraph
			 (C)(13)(y) of this rule, or other recordkeeping service on behalf of the dealer
			 required to maintain and preserve the records, the outside entity shall, upon
			 request by the division, be able to file with the division a written
			 undertaking in a form acceptable to the division, signed by a duly authorized
			 person, to the effect that the records are the property of the dealer required
			 to maintain and preserve the records and will be surrendered promptly on
			 request of the dealer and including the following provision:
With respect to any books and records maintained or preserved
				on behalf of[name of dealer], the undersigned hereby undertakes to permit
				examination of the books and records at any time or from time to time during
				business hours by representatives of the division, and to promptly furnish to
				the division true, correct, complete and current hard copy of any or all or any
				part of the books and records.
Agreement with an outside entity shall not relieve the dealer
				from the responsibility to prepare and maintain records as specified in this
				rule.
(12) Every dealer
			 subject to this rule shall furnish promptly to the division legible, true,
			 complete and current copies of those records of the dealer, that are required
			 to be preserved under this rule, or any other records of the dealer subject to
			 examination by the division, that are requested by the division.
(13) All dealers shall make and keep current
			 the following books and records relating to its business:
(a) As to each "office" which, for purposes
			 of paragraph (C)(13) of this rule is defined as any location where one or more
			 associated persons regularly conduct the business of handling funds or
			 securities or effecting any transactions in, or inducing or attempting to
			 induce the purchase or sale of any security, and for a period of not less than
			 six years, the first two years in an easily accessible place, blotters or other
			 records of original entry containing an itemized daily record of all purchases,
			 sales, receipts and deliveries of securities, including certificate numbers,
			 all receipts and disbursements of cash, and all other debits and credits. The
			 records shall show the account for which each transaction was effected, the
			 name of the security, the amount of securities, the unit and aggregate purchase
			 or sale price, if any, the trade or transaction date, and the name or other
			 designation and capacity of the person from whom the security was purchased or
			 received or to whom it was sold or delivered. For purposes of this rule,
			 "associated person" is defined as a partner, officer, director, salesperson,
			 trader, manager, or any employee handling funds or securities or soliciting
			 transactions or accounts for the dealer.
(b) For a period of not less than six years,
			 the first two years in an easily accessible place, ledgers and other records
			 reflecting all assets and liabilities, income and expense and capital accounts.
(c) For a period of not less than
			 six years, the first two years in an easily accessible place, ledger accounts
			 or other records itemizing, separately as to each cash and margin account of
			 every customer and of the member, broker or dealer and partners thereof, all
			 purchases, sales, receipts and deliveries of securities and commodities for
			 each account, and all other debits and credits to each account.
(d) For a period of not less than three
			 years, the first two years in an easily accessible place, ledgers or other
			 records reflecting:
(i) All securities in
			 transfer;
(ii) Dividends and
			 interest received;
(iii)
			 Securities borrowed and securities loaned;
(iv) Monies borrowed and monies loaned
			 (together with a record of the collateral therefor and any substitutions in
			 collateral);
(v) Securities failed
			 to receive and failed to deliver;
(vi) All long and all short stock record
			 differences arising from the examination, count, verification and comparison,
			 by date of examination, count, verification and comparison showing for each
			 security the number of shares of long or short count differences; and
(vii) Repurchase and reverse
			 repurchase agreements.
(e) For a period of not less than six years,
			 the first two years in an easily accessible place, a securities ledger or other
			 record reflecting, separately for each security as of the clearance dates, all
			 long or short positions, including securities in safekeeping and securities
			 that are the subjects of repurchase or reverse repurchase agreements, carried
			 by the dealer for his account or for the account of its customers or partners
			 or others and, showing the location of all securities long and the offsetting
			 position to all securities short, including long security count differences and
			 short security count differences classified by the date of the physical count
			 and verification in which they were discovered, and in all cases the name or
			 designation of the account in which each position is carried.
(f) As to each office and for a period of not
			 less than three years, the first two years in an easily accessible place, a
			 memorandum of each brokerage order, and of any other instruction, given or
			 received for the purchase or sale of securities, whether executed or
			 unexecuted. The memorandum shall show the terms and conditions of the order or
			 instructions and of any modification or cancellation thereof, the account for
			 which entered, the time the order was received, the time of entry, the price at
			 which executed, the identity of each associated person, if any, responsible for
			 the account, the identity of any other person who entered or accepted the order
			 on behalf of the customer or, if a customer entered the order on an electronic
			 system, a notation of that entry, and, to the extent feasible, the time of
			 execution or cancellation. The memorandum need not show the identity of any
			 person, other than the associated person responsible for the account, who may
			 have entered or accepted the order if the order is entered into an electronic
			 system that generates the memorandum and if that system is not capable of
			 receiving an entry of the identity of any person other than the responsible
			 associated person. In that circumstance, the dealer shall produce upon request
			 by the division a separate record which identifies each other person. Orders
			 entered pursuant to the exercise of discretionary authority by the dealer or
			 any associated person thereof shall be so designated. This memorandum need not
			 be made as to a purchase, sale or redemption of a security on a subscription
			 way basis directly from or to the issuer, if the dealer maintains a copy of the
			 customer's subscription agreement regarding a purchase, or a copy of any other
			 document required by the issuer regarding a sale or redemption. The term
			 "instruction" shall include instructions between partners and employees of the
			 dealer. The term "time of entry" shall mean the time when the dealer
			 transmitted the order or instruction for execution.
(g) As to each office and for a period of not
			 less than three years, the first two years in an easily accessible place, a
			 memorandum of each purchase and sale for the account of the dealer showing the
			 price and, to the extent feasible, the time of execution; and, in addition,
			 where the purchase or sale is with a customer other than a broker or dealer, a
			 memorandum of each order received, showing the time of receipt, the terms and
			 conditions of the order, the account in which it was entered, the identity of
			 each associated person, if any, responsible for the account, the identity of
			 any other person who entered or accepted the order on behalf of the customer
			 or, if a customer entered the order on an electronic system, a notation of that
			 entry. The memorandum need not show the identity of any person other than the
			 associated person responsible for the account who may have entered the order if
			 the order is entered into an electronic system that generates the memorandum
			 and if that system is not capable of receiving an entry of the identity of any
			 person other than the responsible associated person. In that circumstance, the
			 dealer shall produce upon request by the division a separate record which
			 identifies each other person. An order with a customer other than a dealer
			 entered pursuant to the exercise of discretionary authority by the dealer or
			 associated person thereof, shall be so designated.
(h) For a period of not less than three
			 years, the first two years in an easily accessible place, copies of
			 confirmations of every purchase or sale of securities, including all repurchase
			 and reverse repurchase agreements, and copies of notices of any other debit or
			 credit for securities, cash and other items for the account of customers and
			 partners of the dealer.
(i) For a
			 period of not less than three years, the first two years in an easily
			 accessible place, a record of each cash and margin account showing:
(i) The name and address of the beneficial
			 owner of each account;
(ii) Except
			 with respect to exempt employee benefit plan securities, but only to the extent
			 the securities are held by employee benefit plans established by the issuer of
			 the securities, whether or not the beneficial owner of securities registered in
			 the name of the dealer, or a registered clearing agency or its nominee objects
			 to disclosure of his or her identity, address and securities positions to
			 issuers; and
(iii) In the case of
			 a margin account, the signature of the owner; provided that, in the case of a
			 joint account or an account of a corporation, the records are required only in
			 respect of the person or persons authorized to transact business for the
			 account.
(j) For a
			 period of not less than three years, the first two years in an easily
			 accessible place, a record of all puts, calls, spreads, straddles and other
			 options for which the dealer has any direct or indirect interest or which the
			 dealer has granted or guaranteed, containing, at least, an identification of
			 the security and the number of units involved. An OTC derivatives dealer shall
			 also keep a record of all eligible OTC derivative instruments in which the OTC
			 derivatives dealer has any direct or indirect interest or which it has written
			 or guaranteed, containing, at a minimum, an identification of the security or
			 other instrument, the number of units involved, and the identity of the
			 counterparty.
(k) A record of the
			 proof of money balances of all ledger accounts in the form of trial balances,
			 and a record of the computation of aggregate indebtedness and net capital, as
			 of the trial balance date, provided;
(l) For a period until at least three years
			 after the associated person's employment and any other connection with the
			 dealer has terminated, every dealer shall maintain for each office and with
			 regard to each associated person:
(i) A
			 record listing every associated person of the dealer;
(ii) A record listing every office of the
			 dealer where the associated person regularly conducts the business of handling
			 funds or securities or effecting any transactions in, or inducing or attempting
			 to induce the purchase or sale of any security for the dealer;
(iii) A record listing the central
			 registration depository number, if any, and every internal identification
			 number or code assigned to that person by the dealer;
(iv) A questionnaire or application for
			 employment executed by each associated person of the dealer, which
			 questionnaire or application shall be approved in writing by an authorized
			 representative of the dealer and shall contain at least the following
			 information with respect to the person:
(a)
			 The associated person's name, address, social security number, and the starting
			 date of the associated person's employment or other association with the
			 dealer;
(b) The associated
			 person's date of birth;
(c) A
			 complete, consecutive statement of all the associated person's business
			 connections for at least the preceding ten years, including whether the
			 employment was part-time or full-time;
(d) A record of any denial of membership or
			 registration, and of any disciplinary action taken, or sanction imposed, upon
			 the associated person by any federal or state agency, or by any national
			 securities exchange or national securities association, including any finding
			 that the associated person was a cause of any disciplinary action or had
			 violated any law;
(e) A record of
			 any denial, suspension, expulsion or revocation of membership or registration
			 of any dealer with which the associated person was associated in any capacity
			 when such action was taken;
(f) A
			 record of any permanent or temporary injunction entered against the associated
			 person or dealer with which the associated person was associated in any
			 capacity at the time the injunction was entered;
(g) A record of any arrest or indictment for
			 any felony, or any misdemeanor pertaining to securities, commodities, banking,
			 insurance or real estate, including, but not limited to, acting or being
			 associated with a broker, a dealer, investment company, investment adviser,
			 futures sponsor, bank, fraud, false statements or omissions, wrongful taking of
			 property or bribery, forgery, counterfeiting or extortion, and the disposition
			 of the foregoing; and
(h) A record
			 of any other name or names by which the associated person has been known or
			 which he has used; Notwithstanding paragraph (C)(13)(l) of this rule, if the
			 associated person has been registered as a salesperson of the dealer with, or
			 his employment has been approved by, the "Financial Industry Regulatory
			 Agency," or the American stock exchange, llc, the Boston stock exchange, inc.,
			 the Chicago stock exchange, inc., the Pacific exchange, inc., the Philadelphia
			 stock exchange, inc., the Chicago board options exchange, inc., the Cincinnati
			 stock exchange, inc., or the international securities exchange, then retention
			 of a full, correct, and complete copy of any and all applications for the
			 registration or approval shall be deemed to satisfy the requirements of
			 paragraph (C)(13)(l) of this rule.
(m) For a period until at least three years
			 after the associated person's employment and any other connection with the
			 dealer has terminated, every dealer shall maintain for each office and with
			 regard to each associated person records required to be maintained pursuant to
			 17 C.F.R. 240.17 f-2(d), as amended.
(n) For a period of at least three years,
			 every dealer shall maintain copies of all forms X-17F-1A "Report of Missing,
			 Lost, Stolen, or Counterfeit Securities", filed pursuant to 17 C.F.R. 240.17
			 f-1, as amended, all agreements between any national securities exchange,
			 member thereof, registered securities association, broker, dealer, municipal
			 securities dealer, government securities broker, government securities dealer,
			 registered transfer agent, registered clearing agency, participant therein,
			 member of the "Federal Reserve System" and bank whose deposits are insured by
			 the "Federal Deposit Insurance Corporation", regarding registration or other
			 aspects of 17 C.F.R. 240.17 f-1, as amended, and all confirmations or other
			 information received from the "United States Securities and Exchange
			 Commission" or its designee as a result of inquiry.
(o) Every dealer subject to this rule shall
			 preserve and retain during the life of the enterprise and of any successor
			 enterprise, records required to be maintained pursuant to 17 C.F.R. 240.17
			 f-2(e), as amended.
(p) Records
			 required to be made pursuant to 17 C.F.R. 240.15 c3-3(o) as amended.
(q) For a period of not less than three
			 years, the first two years in an easily accessible place, the following records
			 regarding any internal dealer system of which a dealer is the sponsor:
(i) A record of the dealer's customers that
			 have access to an internal dealer system sponsored by the dealer identifying
			 any affiliations between the customers and the dealer;
(ii) Daily summaries of trading in the
			 internal dealer system including:
(a)
			 Securities for which transactions have been executed through use of the system;
			 and
(b) Transaction volume,
			 separately stated for trading occurring during hours when consolidated trade
			 reporting facilities are and are not in operation:
(i) With respect to equity securities, stated
			 in number of trades, number of shares, and total United States dollar value;
(ii) With respect to debt
			 securities, stated in total settlement value in United States dollars; and
(iii) With respect to other
			 securities, stated in number of trades, number of units of securities, and in
			 dollar value, or other appropriate commonly used measure of value of the
			 securities;
(iii) Time-sequenced records of each
			 transaction effected through the internal dealer system, including date and
			 time executed, price, size, security traded, counterparty identification
			 information, and method of execution if internal dealer system allows
			 alternative means or locations for execution, such as routing to another
			 market, matching with limit orders, or executing against the quotations of the
			 dealer sponsoring the system.
(iv)
			 For purposes of paragraph (C)(13)(q) of this rule, "internal dealer system"
			 shall mean any facility, other than a national securities exchange, an exchange
			 exempt from registration based on limited volume, or an alternative trading
			 system that provides a mechanism, automated in full or in part, for collecting,
			 receiving, disseminating, or displaying system orders and facilitating
			 agreement to the basic terms of a purchase or sale of a security between a
			 customer and the sponsor, or between two customers of the sponsor, through use
			 of the internal dealer system or through the dealer sponsor of the system.
(v) For purposes of paragraph
			 (C)(13)(q) of this rule "sponsor" shall mean any dealer that organizes,
			 operates, administers, or otherwise directly controls an internal dealer
			 trading system or, if the operator of the internal dealer system is not a
			 registered dealer, any dealer that, pursuant to contract, affiliation, or other
			 agreement with the system operator, is involved on a regular basis with
			 executing transactions in connection with use of the internal dealer system,
			 other than solely for its own account or as a customer with access to the
			 internal dealer system.
(vi) For
			 purposes of paragraph (C)(13)(q) of this rule, "system order" means any order
			 or other communication or indication submitted by any customer with access to
			 the internal dealer system for entry into a trading system announcing an
			 interest in purchasing or selling a security. "System order" does not include
			 inquiries or indications of interest that are not entered into the internal
			 dealer system.
(r) In
			 an easily accessible place, for a period until at least six years after the
			 earlier of the date an account is closed or the date on which the information
			 is replaced or updated and for each office and for each account with a natural
			 person as a customer or owner:
(i) For
			 purposes of this rule:
(a) An account record
			 including the customer's or owner's name, tax identification number, address,
			 telephone number, date of birth, employment status, including occupation and
			 whether the customer is an associated person of a dealer, annual income, net
			 worth excluding value of primary residence, and the account's investment
			 objectives. In the case of a joint account, the account record must include
			 personal information for each joint owner who is a natural person, however,
			 financial information for the individual joint owners may be combined. The
			 account record shall indicate whether it has been signed by the associated
			 person responsible for the account, if any, and approved or accepted by a
			 "principal" which for purposes of paragraph (C)(13) of this rule is defined as
			 any individual registered with a registered national securities association as
			 a principal or branch manager of a dealer or any other person who has been
			 delegated supervisory responsibility over associated persons, of the dealer.
(b) A record indicating that:
(i) The dealer has furnished to each customer
			 or owner within thirty days of the opening of the account, and thereafter at
			 intervals no greater than thirty-six months, a copy of the account record or an
			 alternate document with all information required by paragraph (C)(13)(r) of
			 this rule. The dealer may elect to send this notification with the next
			 statement mailed to the customer or owner after the opening of the account. The
			 dealer may choose to exclude any tax identification number and date of birth
			 from the account record or alternative document furnished to the customer or
			 owner. The dealer shall include with the account record or alternative document
			 provided to each customer or owner an explanation of any terms regarding
			 investment objectives. The account record or alternate document furnished to
			 the customer or owner shall include or be accompanied by prominent statements
			 that the customer or owner should mark any corrections and return the account
			 record or alternate document to the dealer, and that the customer or owner
			 should notify the dealer of any future changes to information contained in the
			 account record.
(ii) For each
			 account record updated to reflect a change in the name or address of the
			 customer or owner, the dealer furnished a notification of that change to the
			 customer's old address, or to each joint owner, and the associated person, if
			 any, responsible for that account, on or before the thirtieth day after the
			 date the dealer received notice of the change.
(iii) For each change in the account's
			 investment objectives the dealer has furnished to each customer or owner, and
			 the associated person, if any, responsible for that account a copy of the
			 updated customer account record or alternative document with all information
			 required to be furnished by paragraph (C)(13)(r)(i)(b)(i) of this rule, on or
			 before the thirtieth day after the date the dealer received notice of any
			 change, or, if the account was updated for some reason other than the firm
			 receiving notice of a change, after the date the account record was updated.
			 The dealer may elect to send this notification with the next statement
			 scheduled to be mailed to the customer or owner.
(c) For purposes of paragraph (C)(13)(r) of
			 this rule, the neglect, refusal, or inability of a customer or owner to provide
			 or update any account record information required under paragraph
			 (C)(13)(r)(i)(a) of this rule shall excuse the dealer from obtaining that
			 required information.
(d) The
			 account record requirements in paragraph (C)(13)(r)(i)(a) of this rule shall
			 only apply to accounts for which the dealer is, or has within the past
			 thirty-six months been, required to make a suitability determination under the
			 federal securities laws or under the requirements of a self-regulatory
			 organization of which the dealer is a member. In addition, the furnishing
			 requirement in paragraph (C)(13)(r)(i)(b)(i) of this rule shall not be
			 applicable to an account for which, within the last thirty-six months, the
			 dealer has not been required to make a suitability determination under the
			 federal securities laws or under the requirements of a self-regulatory
			 organization of which it is a member. This does not relieve a dealer from any
			 obligation arising from the rules of a self-regulatory organization of which it
			 is a member regarding the collection of information from a customer or owner.
(ii) If an account is a
			 discretionary account, a record containing the dated signature of each customer
			 or owner granting the authority and the dated signature of each natural person
			 to whom discretionary authority was granted; and
(iii) A record for each account indicating
			 that each customer or owner was furnished with a copy of each written agreement
			 entered pertaining to that account and that, if requested by the customer or
			 owner, the customer or owner was furnished with a fully executed copy of each
			 agreement.
(s) A
			 record:
(i) For each office, for a period of
			 not less than three years, the first two years in an easily accessible place,
			 and as to each associated person of each written customer complaint received by
			 the dealer concerning that associated person. The record shall include the
			 complainant's name and address, and account number; the date the complaint was
			 received; the name of any other associated person identified in the complaint;
			 a description of the nature of the complaint; and the disposition of the
			 complaint. Instead of the record, a dealer may maintain a copy of each original
			 complaint in a separate file by the associated person named in the complaint
			 along with a record of the disposition of the complaint.
(ii) Indicating that each customer of the
			 dealer has been provided with a notice containing the address and telephone
			 number of the department of the dealer to which any complaints as to the
			 account may be directed.
(t) For a period of not less than three
			 years, the first two years in an easily accessible place, a record for each
			 office:
(i) As to each associated person
			 listing each purchase and sale of a security attributable, for compensation
			 purposes, to that associated person. The record shall include the amount of
			 compensation if monetary and a description of the compensation if non-monetary.
			 In lieu of making this record, a dealer may elect to produce the required
			 information promptly upon request of the division.
(ii) Of all agreements pertaining to the
			 relationship between each associated person and the dealer including a summary
			 of each associated person's compensation arrangement or plan with the dealer,
			 including commission and concession schedules and, to the extent that
			 compensation is based on factors other than remuneration per trade, the method
			 by which the compensation is determined.
(u) For a period of not less than three
			 years, the first two years in an easily accessible place and for each office, a
			 record, which need not be separate from the advertisements, sales literature,
			 or communications, documenting that the dealer has complied with, or adopted
			 policies and procedures reasonably designed to establish compliance with this
			 rule and which require that advertisements, sales literature, or any other
			 communications with the public by the dealer or its associated persons be
			 approved by a principal.
(v) For a
			 period of not less than six years, the first two years in an easily accessible
			 place and for each office, a record for each office listing, by name or title,
			 each person and that office who, without delay, can explain the types of
			 records the firm maintains at that office and the information contained in
			 those records.
(w) For a period of
			 not less than six years, the first two years in an easily accessible place and
			 for each office, a record listing each principal of a dealer responsible for
			 establishing policies and procedures that are reasonably designed to ensure
			 compliance with the provisions of this rule and any applicable federal
			 requirements or rules of a self-regulatory organization of which the dealer is
			 a member that require acceptance or approval of a record by a principal.
(x) Paragraph (C)(13) of this rule
			 shall not be deemed to require a dealer to make or keep records of transactions
			 cleared for the dealer as are customarily made and kept by a clearing dealer
			 provided that the clearing dealer has and maintains net capital of not less
			 than that required by 17 C.F.R. 240.15 c3-1, as amended.
(y) Paragraph (C)(13) of this rule shall not
			 be deemed to require a dealer to make or keep records of transactions cleared
			 for the dealer by a bank as are customarily made and kept by a clearing dealer,
			 provided the dealer obtains from the bank an agreement in writing to the effect
			 that the records made and kept by the bank are the property of the dealer and
			 that the bank files with the division a written undertaking in a form
			 acceptable to the division and signed by a duly authorized person, that the
			 books and records are available for examination by the division and that the
			 bank will furnish to the division, upon demand, true, correct, complete, and
			 current copies of any or all of the records. The undertaking shall include the
			 following provisions:
The undersigned hereby undertakes to maintain and preserve on
				behalf of [dealer name] the books and records required to be maintained and
				preserved by the dealer pursuant to paragraph (C) of rule
				1301:6-3-15
				of the Administrative Code and to permit examination of the books and records
				at any time or from time to time during business hours by the division, and to
				furnish to the division true, correct, complete, and current copies of any or
				all, or any part, of the books and records. This undertaking shall be binding
				upon the undersigned, and the successors and assigns of the undersigned.
Nothing herein contained shall be deemed to relieve the dealer
				from the responsibility that the books and records be accurately maintained
				pursuant to this rule.
(z)
			 Any report the division, the securities and exchange commission or any
			 self-regulatory organization has requested pursuant to order or settlement, and
			 any examination report shall be retained in an easily accessible place by the
			 dealer for a period of not less than three years after the date of the report.
(aa) Any compliance, supervisory,
			 and procedures manual, including any updates, modifications, and revisions to
			 the manual, describing the policies and practices of the dealer with respect to
			 compliance and supervision of the activities of each natural person associated
			 with the dealer shall be retained in an easily accessible place by the dealer
			 until three years after the termination of the use of the manual.
(bb) All reports produced to review for
			 unusual activity in customer accounts shall be retained by the dealer in an
			 easily accessible place for a period until eighteen months after the date the
			 report was generated. In lieu of maintaining the reports, a dealer may produce
			 promptly the reports upon request by the division. If a report was generated in
			 a computer system that has been changed in the most recent eighteen month
			 period in a manner such that the report cannot be reproduced using historical
			 data in the same format as it was originally generated, the report may be
			 produced by using the historical data in the current system, but must be
			 accompanied by a record explaining each system change which affected the
			 reports. If a report is generated in a computer system that has been changed in
			 the most recent eighteen month period in a manner such that the report cannot
			 be reproduced in any format using the historical data, the dealer shall
			 promptly produce upon request a record of the parameters that were used to
			 generate the report at the time specified by the division, including a record
			 of the frequency with which the reports were generated.
(cc) Records for the most recent two year
			 period required to be made pursuant to paragraphs (C)(13)(a), (C)(13)(f),
			 (C)(13)(g), (C)(13)(l), (C)(13)(r), (C)(13)(s)(i), (C)(13)(t), (C)(13)(u),
			 (C)(13)(v), (C)(13)(w), and (C)(13)(bb) of this rule and paragraph (C)(2)(c) of
			 this rule which relate to an office shall be maintained at the office to which
			 they relate. If an office is a private residence where only one associated
			 person, or multiple associated persons who reside at that location and are
			 members of the same immediate family, regularly conducts business, and it is
			 not held out to the public as an office nor are funds or securities of any
			 customer of the dealer handled there, the dealer need not maintain records at
			 that office, but the records must be maintained at another location within the
			 same state as the dealer may select. Rather than maintain the records at each
			 office, the dealer may choose to produce the records promptly at the request of
			 the division.