In an effort to make information more readily available for investors, the Securities and Exchange Commission proposed a new rule called Regulation E-Delivery.
The rule would expand the ability of issuers, broker-dealers, investment advisers, and others to use electronic delivery to satisfy information delivery requirements under the federal securities laws.
Under the current regulation, required regulatory information typically is delivered in paper format unless the recipient elects otherwise.
The proposed e-delivery approach includes requirements and conditions under which required information could be delivered electronically without first obtaining affirmative consent.
“Today, the Commission took an important step toward allowing the financial services industry to harness technology for the benefit of everyday American investors,” said SEC Chairman Paul Atkins. “By proposing to permit electronic delivery to become the default method for issuers, market intermediaries, and others to communicate with investors, we are taking another stride toward a regulatory framework suitable for the modern era, a key pillar of my agenda. In an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic, not a standard.”
The SEC pointed out that Regulation E-Delivery would still preserve the ability to receive delivery in paper format on request. There will also be a transition process for investors and others currently receiving regulatory information in paper format. They would receive two paper notices if they would be transitioned to e-delivery under the rule, which would provide information about the upcoming transition and the ability to opt out of e-delivery.
The SEC says the new approach will provide savings to issuers, market intermediaries, and investors, in paper, printing, and postage costs.
“The proposal reflects how today’s issuers, market intermediaries, investors, and others use electronic media to provide and access information,” the commission stated. “E-delivery offers the opportunity to give investors and others potentially more personalized, interactive, timely, and efficient experiences with disclosure than paper delivery. It also provides accessibility and retention benefits.”
The information deliverable electronically under the proposed rule would include, among other things, prospectuses for funds and other issuers, fund annual and semi-annual shareholder reports, proxy statements, trade confirmations, disclosures pursuant to Form CRS, and Form ADV Part 2 Brochures.
The public comment period will remain open for 60 days after the proposal is published in the Federal Register.
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