Should the proposed rule be adopted, it would:

• modify the current custody rule’s exception from the obligation to maintain client assets with a qualified custodian for certain privately offered securities (including expanding the exception to include certain physical assets)
• update the investment adviser recordkeeping rule under which advisers would be required to keep additional, more detailed records of trade and transaction activity and position information for each client account of which it has custody
• revise Form ADV to both align advisers’ reporting obligations with the proposed safeguarding rule’s requirements and improve the accuracy of custody-related data available to the SEC, its staff, and the public
• require that an adviser enter into a written agreement with and obtain certain reasonable assurances from qualified custodians to ensure clients receive certain standard custodial protections when an adviser has custody of their assets. These protections are designed, among other things, to ensure client assets are properly segregated and held in accounts designed to protect the assets in the event of a qualified custodian bankruptcy or other insolvency
• maintain the current custody rule’s requirement for an adviser to undergo a surprise examination by an independent public accountant to verify client assets but expand the availability of the current custody rule’s audit provision as a means of satisfying the surprise examination requirement

Interested parties may submit feedback on the reopening during the public comment period, which will remain open for 60 days following publication in the Federal Register. For further details, including ways to respond, refer to the Safeguarding Advisory Client Assets; Reopening of Comment Period proposed rule on the SEC’s website.

Sources:

SEC Reopens Comment Period for Enhanced Safeguarding Rule for Registered Investment Advisers Proposal (sec.gov)

Proposed Rule (sec.gov)