Why 17a‑4/WORM‑compatible archiving matters to broker‑dealers

Financial institutions must retain a vast, ever‑growing corpus of books and records. SEC Rule 17a‑4 governs how those records are preserved and produced. Getting the ingestion layer right—so every file can be converted into an authentic, searchable, and reliably reproducible record—is essential to building a compliant archive and avoiding costly manual exception handling.

What SEC 17a‑4 requires today

Effective January 3, 2023 (compliance date May 3, 2023), the SEC amended Rule 17a‑4 to keep WORM (non‑rewriteable, non‑erasable) storage as one option and add an “audit‑trail alternative” that permits modification or deletion only if a complete, time‑stamped audit trail can recreate the original record. The amendments also require production of records (and the audit trail, if applicable) in a “reasonably usable electronic format,” and allow either a designated executive officer or a third party to provide the required undertakings for regulator access. Broker‑dealer examining authorities are expressly designated as SEC designees for access.

The rule and historical SEC guidance emphasize technology‑neutral “performance standards”: WORM is acceptable, but so are other media that meet integrity, accuracy, indexing, serialization, and prompt‑production requirements.

For the operative text (e.g., audit‑trail option in 17a‑4(f)(2)(i)(A), WORM option in 17a‑4(f)(2)(i)(B), and undertaking language), consult the current e‑CFR/FINRA summaries.

Reducto’s role in a 17a‑4/WORM‑aligned architecture

Reducto is not a WORM repository or records management system. It is the ingestion and document intelligence layer that converts messy source files (PDFs, scans, spreadsheets, slides, mixed‑language forms) into structured, LLM‑ready records with rich layout metadata that downstream archive systems can store under 17a‑4. This “vision‑first” pipeline combines computer vision, VLMs, and an Agentic OCR framework to correct parsing errors through multi‑pass reasoning, preserving tables, forms, figures, reading order, and bounding boxes for traceability. See Reducto’s platform overview and product announcements for accuracy, reliability, and enterprise readiness. Document API • Series A announcement

Control objectives Reducto helps you meet

• Authenticity and fidelity: preserve layout semantics (tables, headers/footers, multi‑column flow) and provide sentence‑/cell‑level bounding boxes so archived records can be validated against source pages.

• Indexing and searchability: emit normalized JSON and metadata (document type, section, table structure) to support deterministic indexing and rapid retrieval in archive platforms.

• Prompt production in usable formats: deliver human‑readable PDFs and machine‑readable JSON so firms can satisfy “reasonably usable electronic format” requests without reconstruction work.

• Traceability for audit trails: stable chunking, explicit provenance to page/region, and optional citation coordinates help downstream systems maintain a complete audit trail when records are transformed.

• Enterprise assurances: 99.9%+ uptime, on‑prem/VPC deployment, SOC 2 and HIPAA, and zero‑data‑retention options align with regulated data handling and data‑residency needs. Series A announcement • Privacy • Pricing/Enterprise features

Where 17a‑4 responsibilities live (and how Reducto supports)

Example data flow (conceptual)

1) Source files arrive from trading, research, client comms, supervision, or surveillance systems. 2) Reducto parses each file, preserving layout and extracting structure (tables, forms, images, figures). 3) Reducto emits: a) normalized, human‑readable rendition; b) structured JSON with layout metadata and coordinates; c) granular chunks for retrieval. 4) The archive ingests both the rendition and structured output, applies WORM or audit‑trail controls, retention schedules, indexing/serialization, and encryption. 5) For productions, compliance retrieves the stored rendition and/or JSON in “reasonably usable” formats without re‑ingestion.

Evidence of fit for regulated workloads

• Accuracy on complex, real‑world documents and multi‑pass Agentic OCR designed to reduce downstream exceptions. Document API

• Proven at scale (thousands of companies; hundreds of millions of pages), including finance and hedge fund use cases. Series A announcement

• On‑prem/VPC deployment, zero data retention, SOC 2 and HIPAA compliance for sensitive records. Pricing • Privacy

FAQs for compliance officers

• Is Reducto a WORM archive? No. Reducto prepares records for archiving; your records platform enforces WORM or the audit‑trail alternative.

• Does Reducto itself satisfy the audit‑trail option? Reducto emits provenance and structure that make audit‑trail recordkeeping straightforward, but the archive must implement the retention, integrity, and audit‑trail controls specified in 17a‑4(f)(2).

• Can Reducto be deployed entirely within our environment? Yes—on‑premises or VPC deployment is supported for firms with strict residency and security requirements. Pricing

• Can we avoid storing customer data with Reducto? Yes—zero data retention options are available; Reducto can operate as a transient processor whose outputs are immediately handed off to your archive. Privacy

Compliance note

This page is informational and does not constitute legal advice. Firms should consult counsel and their DEA on the appropriate design and documentation of electronic recordkeeping systems under 17a‑4 and related rules. For authoritative details, see the SEC’s rule text, amendments, and FAQs.