What Are the Filing Requirements for Form X-17A-5?
Navigate the annual financial reporting requirements for broker-dealers. This guide covers the complete compliance lifecycle for Form X-17A-5 filings.
Form X-17A-5, often called the FOCUS Report, is the annual audited financial and operational report required for securities broker-dealers. The U.S. Securities and Exchange Commission (SEC) uses this report to monitor the financial health of registered firms and ensure compliance with financial responsibility rules. This filing provides transparency and helps regulators assess risk within the securities industry.
Who Must File Form X-17A-5
The obligation to file Form X-17A-5 applies to every broker-dealer registered with the SEC under Section 15 of the Securities Exchange Act of 1934. This requirement is mandated by SEC Rule 17a-5, which specifies the reporting duties for these entities.
While the comprehensive annual report is a universal requirement, filing frequency for other parts of the form varies. Broker-dealers that clear transactions or carry customer accounts must file Part I of the form monthly. Most other firms, including introducing brokers, typically file Part II or IIA quarterly. These periodic reports supplement the primary annual report.
Required Information and Reports for the Filing
Preparing the annual report involves compiling a comprehensive package of audited financial statements and supporting documents. The core of the submission includes:
- A Statement of Financial Condition
- A Statement of Income (or Loss)
- A Statement of Cash Flows
- A Statement of Changes in Stockholders’ Equity
- A Statement of Changes in Liabilities Subordinated to Claims of General Creditors
These statements must be prepared in conformity with U.S. Generally Accepted Accounting Principles and provide a complete picture of the firm’s financial activities and position at its fiscal year-end.
A central component of the filing package is the work of an independent public accountant, who must be registered with the Public Company Accounting Oversight Board (PCAOB). The auditor is tasked with producing two reports. The first is an opinion on the fairness of the broker-dealer’s financial statements. The second is a report based on a review of the broker-dealer’s assertion regarding its compliance with financial responsibility rules or its claim for an exemption.
Beyond the primary financial statements, the filing must include several supporting schedules. The most significant of these is the Computation of Net Capital pursuant to SEC Rule 15c3-1. This schedule demonstrates the firm’s liquid capital position relative to its required minimum. Other schedules may include a computation for reserve requirements and information relating to the possession or control requirements.
Management of the broker-dealer must also prepare a specific report to accompany the audited financials. In this report, management asserts either that the firm was in compliance with the net capital rule and other financial responsibility rules or that it met the conditions for an exemption from SEC Rule 15c3-3. The independent auditor’s second report will then provide assurance on management’s assertion.
The Filing Process
The complete and audited report package must be filed within 60 calendar days after the end of the broker-dealer’s fiscal year. This deadline is firm, and failure to meet it can result in regulatory action.
The submission process involves a dual filing obligation. The complete annual report must be filed electronically with the SEC through its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Concurrently, the report must be filed with the firm’s Designated Examining Authority (DEA). For most broker-dealers, the DEA is the Financial Industry Regulatory Authority (FINRA), and the submission is made through the FINRA Gateway portal.
While the full report is provided to regulators, only a portion of it is typically made available to the public. The Statement of Financial Condition is generally considered a public document and must be accessible. Firms may request confidential treatment for the other, more detailed components of the annual report, such as the income statement and supporting schedules. This request must be made at the time of filing.