SEC Rule-17a

Alibaba Cloud completed the assessment related to the ability of our Object Storage Service (“OSS”) solution to comply with the broker-dealer media requirements promulgated by the Securities and Exchange Commission (SEC) Rule 17a-4(f) and Financial Industry Regulatory Authority (FINRA) Rule 4511. Through this assessment, Alibaba Cloud can serve more customers in the global financial industry, as these regulatory requirements have been widely adopted by many other countries outside of the US as part of the measurement of a product function and feature.

The assessment was performed by Cohasset Associates Inc., an independent third-party assessment firm that specializes in records management and information governance professional consulting services, education and training.

Under Rule 17a-4, electronic records must be preserved exclusively in a non-rewriteable and non-erasable format. This interpretation further clarifies that broker-dealers employ a storage system that prevents alteration or erasure of the records for the required retention period. Broker-dealers are allowed to preserve records on “electronic storage media.” Rule 17a-4 defines the term “electronic storage media” as any digital storage medium or system. The rule requires the preservation of electronic storage media to be exclusively in a non-rewriteable and non-erasable format. WORM (write once read many) media is used for compliance with the rule.

Compliance with these regulatory obligations is of utmost importance to the industry with potential regulatory actions and accompanying fines exceeding one million dollars in relation to non-compliance with the SEC and FINRA “WORM” requirements. Cohasset’s assessment is focused on the ability of the Alibaba Cloud OSS to meet the five electronic records requirements, which pertain to recording, storage, and retention of electronic records, as stipulated in SEC Rule 17a-4(f).