The Financial Industry Regulatory Authority plans to send its updated rule allowing broker-dealers to make electronic delivery their default method when sending investor disclosures and other communications to the Securities and Exchange Commission for approval.
"FINRA's Board recently approved allowing member firms to make e‑delivery the default method for delivering required communications under FINRA rules, subject to specified conditions to ensure customer protection and choice — such as providing customers with appropriate notice and an opportunity to choose to receive paper delivery, and requiring firms to remediate e‑delivery failures and establish other policies and procedures," FINRA CEO Robert Cook said Tuesday in a blog post.
FINRA's updated guidance would only apply to FINRA rules, Cook said. FINRA "plans to file proposed rule changes with the SEC, publish related guidance in a Regulatory Notice, and monitor how the new approach works in practice so that any necessary adjustments can be made," Cook said.
FINRA's approach "would not require member firms to change what they are doing today — they could still utilize paper delivery, or they could still follow existing FINRA guidance permitting e‑delivery for customers who consent to such delivery or who have an account with an online-only firm," Cook continued.
The changes are part of the broker-dealer self-regulator's FINRA Forward initiative.
"E-delivery makes sense; it's seamless and convenient, saves money, reduces waste, and reflects investor preferences," Eric Pan, president and CEO of the Investment Company Institute, said in a statement.
A recent ICI survey showed that investors in funds "overwhelmingly support e-delivery with 88% of fund investors agreeing that e-delivery should be the default, as long as people can still request paper at no cost," Pan said.
"We found potential savings for funds alone of $3 billion to $4 billion over five years from transitioning to default e-delivery," he added.
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