Quick Answer
Broker-dealers must make and preserve federally required records: blotters and ledgers for 6 years, order tickets and confirmations and communications for 3 years (first 2 easily accessible), and written complaints for 4 years under FINRA. Investment advisers instead keep records for 5 years from fiscal year-end, the first 2 in the principal office. States cannot exceed those federal standards.
The final piece of the disclosure framework is recordkeeping. The exam tests both the federal record categories and how much authority a state has over a broker-dealer's books and records.
What Records Must a Broker-Dealer Make?
Under the federal recordkeeping standard, broker-dealers must create and maintain:
- Trade blotters: a chronological, itemized daily record of every purchase, sale, receipt, and delivery of securities, and every cash receipt and disbursement
- Asset and liability ledgers
- Income and expense ledgers
- Customer account ledgers
- Customer account records: name, address, tax ID, employment, investment objectives, and authorized persons
- Securities records: each security held, its location, and its ownership
- Order tickets: a memorandum of each order, including time of receipt, execution, and terms
- Trial balances
- Written customer complaints and the firm's response
How Long Must Each Record Type Be Preserved?
The federal retention schedule sets these periods:
| Record Type | Retention Period |
|---|---|
| Trade blotters and general ledgers | 6 years |
| Account-opening and maintenance records | Generally 6 years, tied to account closure or the applicable update date |
| Order tickets, trade confirmations, account statements | 3 years (first 2 years in an easily accessible place) |
| Communications (correspondence, advertising, internal memos) | 3 years (first 2 years in an easily accessible place) |
| Written customer complaints | 4 years, under the FINRA overlay |
| Employment applications, Form U4/U5 | 3 years after termination |
| Partnership articles, corporate charter documents | Life of the enterprise, plus 3 years after termination |
Records must be kept in a non-rewriteable, non-erasable (WORM) format, or under the newer audit-trail alternative. The exam focuses on the general duty to maintain records, not the technical details of electronic storage formats.
Exam Tip: Gotchas
Keep the record groups separate. Blotters and ledgers use six years. Order tickets, confirmations, account statements, and communications use three years, with the first two easily accessible. Written customer complaints get their own four-year period from FINRA, longer than the three-year default for most transaction records.
How Long Must an Investment Adviser Keep Its Records?
Advisers follow a different rule from broker-dealers. NASAA has issued a model rule for investment adviser books and records, and its retention period is not the broker-dealer schedule above:
- Keep required records for five years from the end of the fiscal year in which the last entry was made on the record
- Keep the first two years of that period in the adviser's principal office
- Record each personal securities transaction of an advisory representative no later than 10 days after the end of the calendar quarter in which the transaction happened
Exam Tip: Gotchas
Two traps live here. First, the adviser's five years run from the end of the fiscal year, not from the date of the last entry. Second, the five-year period belongs to advisers; a broker-dealer blotter still uses six years. A question that pairs "five years" with "date of the last entry" is wrong on the starting point even though the number is right.
How Far Can a State's Recordkeeping Authority Reach?
- The North American Securities Administrators Association (NASAA) has not issued a model rule on broker-dealer books and records
- Federal law limits state regulatory authority over broker-dealer recordkeeping
- A state may require records consistent with the federal standards, but it cannot impose recordkeeping requirements that exceed them
- The state Administrator may examine a broker-dealer's books and records, and may also prescribe records by rule or order. For broker-dealers, that power is capped by federal law
Exam Tip: Gotchas
Federal law limits the Administrator's recordkeeping power over broker-dealers; it does not eliminate it. A state cannot require a broker-dealer to make or keep records beyond what the federal standards already require, so the practical Series 63 answer is that the federal rules set the content of a broker-dealer's records.
What Should You Check on Exam Day?
- Sort any retention question into one of three buckets: 6 years (blotters, ledgers), 3 years (order tickets, confirmations, statements, communications), or 4 years (written complaints, FINRA overlay).
- Check whose records the question asks about. An investment adviser uses 5 years from fiscal year-end, with the first 2 years in the principal office.
- Remember the "first two years easily accessible" condition applies to the 3-year bucket.
- Confirm state authority over broker-dealer records: consistent with federal standards, never beyond them, and there is no NASAA model rule filling the gap.