Close Close

Regulation and Compliance > Federal Regulation > FINRA

FINRA Files to Allow BDs to Receive E-Signatures

Your article was successfully shared with the contacts you provided.

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.”

The proposed rule change, FINRA added, is consistent with the Electronic Signatures in Global and National Commerce Act, or E-Sign Act, which facilitates the use of electronic signatures.

If approved by the SEC, FINRA will announce the effective date of the proposed rule change in a regulatory notice to be published no later than 60 days following SEC approval.

The effective date will be no later than 30 days following publication of the notice.

— Check out SEC Adopts Rule Allowing BDs to Release Research Reports on Funds, ETFs on ThinkAdvisor.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.