Cost-Basis Calculation Service Need Not Register as BD
The SEC has granted no-action relief to a provider of a service for calculating securities cost-basis, indicating that it does not require broker-dealer registration. The no-action request noted that a service provider to a broker-dealer may be required to register as a broker dealer. However, the request explained that the firm would not receive a “salesman’s stake” in commissions because it would charge usage fees rather than fees tied to the size or value of securities transactions. Moreover, the firm would not advise on transactions, solicit securities transactions, or handle customer funds.
OUR TAKE: This No-Action Letter supports longstanding authority that the most significant factor in whether a service provider to BDs must register is whether it charges transaction-based compensation.