FINRA Files to Allow BDs to Receive E-Signatures

The Financial Industry Regulatory Authority has filed a rule amendment to allow broker-dealers to accept e-signatures.

The broker-dealer self-regulator filed with the Securities and Exchange Commission to amend Rule 4512 on customer account information.

FINRA notes in its proposed rule that some broker-dealers have said not being allowed to obtain electronic signatures puts them at a “competitive disadvantage” over investment advisors that are allowed to take e-signatures.

Also, FINRA states that its “members that have adopted automated and electronic processes have stated that the current requirement results in significant administrative inefficiencies, particularly because all other account documentation, including the customer authorization form, and related recordkeeping may be completed electronically through a streamlined process.”

Given technological advances relating to electronic signatures, including with respect to authentication and security, FINRA states that it “believes that the requirement under Rule 4512(a)(3) that members obtain an associated person’s wet signature has become obsolete.”