Welcome to Books and Records, the operational recordkeeping framework that lets a broker-dealer prove its financial condition, customer activity, and securities positions.
Function 1 contains 35 scored items and represents 70% of the exam.
What You'll Learn
In this unit, you'll cover:
- Reconciliations and current records: How firms compare records, capture differences, and maintain the core books.
- Timeline for posting entries: Which entries belong in the daily blotter and which financial records are prepared monthly.
- Preservation and electronic storage: Record-retention periods, access standards, and safeguards for digital records.
- Prohibited books-and-records conduct: Why inaccurate, incomplete, inaccessible, or prematurely destroyed records create violations.
Why This Matters
Operations personnel turn every cash movement, securities movement, and account transaction into a reliable record trail. That trail supports reconciliations, financial reporting, customer protection, and regulatory examinations.
The exam often tests timing and distinctions: daily versus monthly records, 3-year versus 6-year preservation, and secure electronic preservation versus an editable file.
Let's start with reconciliations and the records that make them possible.