SIFMA, SIFMA AMG Express Strong Concerns with SEC Proposed Rules on Predictive Data Analytics

Washington, D.C., October 10, 2023 – SIFMA and SIFMA AMG today submitted a letter to the Securities and Exchange Commission (SEC) on the proposed rules that would require the elimination or neutralization of the use of predictive data analytics (PDA) and PDA-like technologies by Broker-Dealers and RIAs. SIFMA strongly urges the Commission not to move forward with the proposed framework, and instead consider more appropriate ways to address potential risks related to the use of PDA-like technologies.

“The Proposed Rules would impose unreasonable and unworkable requirements on brokers and advisors and would limit their ability to use technology to provide valuable information and services to their clients,” said SIFMA President and CEO Kenneth E. Bentsen, Jr in the letter. “These impractical limitations would harm market efficiency, competition, and investors.”

SIFMA and SIFMA AMG identified the following areas of concern:

• The existing regulatory regime for investor communications by brokers and advisers is robust, reasonable, and effective, and the Commission has not shown any evidence or reason to justify new rules for their current or future uses of technology.
• The Proposed Rules would require brokers and advisers to “eliminate or neutralize” conflicts of interest in all types of investor interactions and uses of technology, regardless of the existing framework or the nature of the relationship, and would burden many uses of technology that are unrelated to the Commission’s limited stated concerns.
• The Proposed Rules would impose substantial and unjustified burdens which prevent a vast array of beneficial investor interactions and advisory practices.

The comment letter further expands on these views and can be found here.

-30-

SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development.  SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).