The U.S. securities industry is calling on regulators to adopt electronic delivery as the standard method of communicating with investors.
A collection of industry trade groups, led by the U.S. Securities Industry and Financial Markets Association (SIFMA), issued a discussion paper that proposes revising federal rules and guidance to establish digital delivery as the default for transmitting disclosure documents, such as prospectuses and client account statements.
The paper calls on the U.S. Securities and Exchange Commission (SEC) to amend its rules to reflect the fact that electronic delivery has become the preferred method of communicating for most investors.
SIFMA proposes a one-year transition period for firms to make the switch, with new clients defaulting to electronic delivery after that. Clients would also still have the option of receiving physical disclosure documents.
The groups argued that allowing firms to use digital communications as the default will improve the investor experience, allowing for more timely, easily accessible information.
“The industry has long supported the common sense and environmentally friendly move to digital delivery, which is consistent with the way Americans want to receive information,” said Kenneth Bentsen, Jr., president and CEO of SIFMA.
“Not only is e-delivery faster, safer, and more timely than physical delivery, it also allows investors to review documents in more user-friendly formats, when and where they choose, leveraging modern communications technology to create deeper and more productive investor engagement. It’s a logical next step for the SEC to take, and even more so in the time of the Covid-19 pandemic,” Bentsen added.
Recently, an Ontario government task force also called for a move to digital delivery of investor communications, citing the benefits of faster, more cost-effective disclosure.