Brokerage Firms Can Now Use Microsoft 365 Copilot with Confidence, Meets SEC Compliance Requirements
Under new SEC rules, financial services firms must keep detailed records of transactions and communications to protect investors and help prevent fraud. These firms need to know that the products and services they employ are capable of meeting the stringent requirements of the regulation.
Microsoft has partnered with records management consulting firm Cohasset Associates to produce an expanded assessment of Microsoft 365 services, including Microsoft Copilot and Microsoft Loop. This report gives firms clarity that they can innovate broadly with the new generative AI capabilities of Copilot and explore the unique collaborative workspace capabilities of Microsoft Loop, while also remaining confident of their ability to ensure compliance.
What the New SEC Rules Require
In a nutshell, SEC Rules 17a-4 and 18a-6 impose new requirements on recordkeeping that will impact many firms. These rules apply to brokers, dealers, and members of national security exchanges, and they require that certain types of records be preserved for certain amounts of time to facilitate regulatory examinations and compliance checks. Additionally, SEC Rule 18a-6 is tailored to security-based swap entities, and specifically targets records related to security-based swap transactions.
The primary goal of all these rules is to protect investors and maintain the integrity of financial markets by ensuring that all transactions are properly documented and can be reviewed if necessary. The regulation includes requirements for the following:
- Recordkeeping: Firms must keep records of all their transactions, including trade confirmations, account statements, and communications with clients.
- Retention periods: The rule specifies how long these records must be kept. For example, some records need to be retained for at least six years, with the first two years’ records being easily accessible.
- Accessibility: The records must be stored in a way that they can be quickly accessed if needed for audits or investigations.
Helping Ensure Compliance through an Independent Assessment from Cohasset Associates
When the SEC revised Rules 17a-4 and 18a-6 in October 2022 to keep pace with rapid technological advances, Microsoft enlisted Cohasset Associates to produce an independent assessment of its compliance capabilities. The latest Cohasset Associates assessment is an update to their earlier report, and it includes detailed evaluations and recommendations for how to implement and configure controls within Copilot and Microsoft Loop to ensure compliance.
Easier and More Efficient Compliance with Microsoft Cloud for Financial Services
Helping firms reduce the friction of meeting compliance requirements while embracing new opportunities through technology is a core tenet of Microsoft Cloud for Financial Services. Microsoft exists to help capital markets firms, banks, insurers, and others harness the benefits of cloud and AI technologies with a fit-for-purpose cloud platform, off-the-shelf accelerators, a broadly aligned partner ecosystem, and comprehensive investments to promote compliance and transparency.
Discover More
To help financial institutions quickly embrace cloud and AI technologies, Microsoft is committed to ensuring that our services remain compliant with all major regulations worldwide. For more information and to learn more on how we empower firms to unlock business value and deepen customer relationships in the era of AI:
Conclusion
Microsoft 365 Copilot with its innovative generative AI capabilities and Microsoft Loop with its unique collaborative workspace capabilities can help brokerage firms innovate while ensuring compliance with SEC rules. With the latest assessment from Cohasset Associates, firms can confidently use Microsoft 365 Copilot and Microsoft Loop, while reducing the friction of meeting compliance requirements.
FAQs
Q: What are the new SEC rules for financial services firms?
A: SEC Rules 17a-4 and 18a-6 impose new requirements on recordkeeping, retention periods, and accessibility of records for financial services firms.
Q: How can firms ensure compliance with the new SEC rules?
A: Firms can ensure compliance by implementing controls within Microsoft 365 Copilot and Microsoft Loop, as recommended in the Cohasset Associates assessment, and by maintaining detailed records of transactions and communications.
Q: What are the benefits of using Microsoft Cloud for Financial Services?
A: Microsoft Cloud for Financial Services helps firms reduce the friction of meeting compliance requirements while embracing new opportunities through technology, promoting compliance and transparency, and empowering firms to unlock business value and deepen customer relationships in the era of AI.
Q: Is Microsoft committed to ensuring compliance with all major regulations worldwide?
A: Yes, Microsoft is committed to ensuring that our services remain compliant with all major regulations worldwide, and provides a range of solutions to help financial services firms ensure compliance with regulatory requirements.
