Patrick Moran, CPA, Partner, Suma Chander, Partner and Don Melody, CPA, CFE, Partner
Key Takeaways
1. The Securities and Exchange Commission finalized a phased schedule requiring broker-dealers and related entities to electronically file FOCUS Reports and Form 17-H beginning June 30, 2025.
All filings must eventually be submitted through the Electronic Data Gathering, Analysis and Retrieval system using structured data formats such as Inline eXtensible Business Reporting Language or eXtensible Markup Language.
2. The move to electronic and structured filings is expected to improve data consistency, enhance regulatory oversight and increase responsiveness to market events.
By enabling automation and real-time analysis, the changes aim to reduce lag between submission and action while allowing better comparability across firms.
3. Compliance will require significant upfront investment in technology, staffing and training, especially for firms without current infrastructure for structured reporting.
Broker-dealers should prepare for increased scrutiny from regulators and self-regulatory organizations due to greater data transparency and accessibility.
The Securities and Exchange Commission (SEC) issued its official fact sheet, “Updates to Exchange Act Electronic Submission Requirements; FOCUS Report Amendments” in December, bringing clarity to a lengthy process of modernizing Securities Exchange Act of 1934 filing requirements. This landmark industry shift requiring electronic submission of regulatory filings, also includes the Financial and Operational Combined Uniform Single report (FOCUS Report) Form X-17a-5 and Form 17-H.
Updated Compliance Dates
The SEC’s revised rolling compliance schedule for electronic submissions applicable to broker-dealers, security-based swap dealers and major security-based swap participants is outlined below:
Date | Requirement |
June 30, 2025 |
|
March 1, 2026 |
|
March 31, 2026 |
|
June 30, 2026 |
|
June 30, 2028 |
|
“Structured Data” Defined
The SEC requires registrants to submit the referenced documents in an Inline eXtensible Business Reporting Language (XBRL) or a custom eXtensible Markup Language (XML).
Other Noteworthy Changes
Along with the requirement for electronic filings in the Electronic Submission of Certain Materials Under the Securities Exchange Act of 1934, in amendments regarding the FOCUS Report, the SEC stated that they will remove the notary public signature line from Part III of Form X-17A-5 citing amendments to ensure that electronic signatures are authentic.
Implications for Broker-Dealers
The implementation of these changes is anticipated to deliver long-term benefits to the broker-dealer industry. Chief among them is the standardization of data and reporting, which will enhance comparability across firms and enable third-party tools to generate high-quality data in a more timely and efficient manner.
Additionally, the structured nature of the data is expected to allow the SEC and other regulatory bodies to respond more quickly to market events by reducing the lag between report submission and actionable insights. The use of automated analytics will further streamline oversight and enhance responsiveness.
That said, the shift toward electronic reporting will come with initial compliance costs for the industry. These may include:
- Technology upgrades essential to support EDGAR submission formats. This burden will be of particular importance to entities without the current infrastructure to produce such reporting.
- Compliance training must include electronic filing protocols and changes to retention policies.
- Timeliness becomes critical and appropriate upfront staffing to comply with the recently published reporting dates.
- Broker-dealers should expect closer scrutiny from both regulators and self-regulatory organizations (SRO)s due to improved data accessibility.
We Can Help
While resource-intensive, electronic filings will provide significant value in the modernization of the securities industry. The move toward uniform, machine-readable electronic filings is expected to significantly enhance regulatory oversight across the industry. Over time, it will also streamline the financial reporting process, reducing the time and resources required for filings by reporting teams.
We can help broker dealers simplify SEC compliance by converting financial statements into a structured XBRL format. Using AI-driven tagging, we can automate the process with speed and precision, enhanced by expert human review for accuracy and compliance. We offer a technology-driven service that helps ensure fully validated, compatible submission of annual audits and FOCUS reports.
Contact Us
If you have any questions or would like additional information, contact your PKF O’Connor Davies client service team or:
Patrick Moran, CPA
Partner
pmoran@pkfod.com | 914.279.0276
Suma Chander
Partner-in-Charge, Technology Advisory
schander@pkfod.com | 212.286.2600
Don Melody, CPA, CFE
Partner
dmelody@pkfod.com | 646.893.0178