Washington, D.C., October 1, 2021 – SIFMA today submitted a letter to the U.S. Securities and Exchange Commission (SEC) in response to the SEC’s ‘Request for Information and Comments on Broker-Dealer and Investment Adviser Digital Engagement Practices, Related Tools and Methods, and Regulatory Considerations and Potential Approaches; Information and Comments on Investment Adviser Use of Technology to Develop and Provide Investment Advice.’

“Used responsibly, DEPs provide significant benefits to retail investors, including enhanced access to customized products and services, lower costs, access to a broader range of products, better customer service, and improved compliance efforts leading to safer markets,” Kevin M. Carroll, SIFMA Managing Director and Associate General Counsel, wrote in the letter. “Certain DEPs also raise potential risks, highlighting the need to ensure investor protection in connection with their use.  The existing, robust regulatory regime, however, amply addresses firms’ use of DEPs today, preserving their well-documented benefits, while appropriately managing potential risks.”

The primary intersection between DEPs and the current regulatory regime are in two discrete areas:

• communications to retail investors (i.e., educational, informational, advertising, and marketing) and
• potential recommendations (i.e., personalized investment advice) to retail investors.

“FINRA’s communications and related rules and guidance cover the former, and the SEC’s Regulation Best Interest covers the latter.  Accordingly, new rules, guidance, or interpretations are not necessary or appropriate to address DEP use in our industry today,” Carroll continued in the letter. “In fact, such additional regulation may well have the effect of undermining its very purpose by limiting information and access to investment opportunities and educational tools by under-represented, less financially educated, and/or less affluent retail investors – the presumed beneficiaries of such prospective regulation.”

The letter also noted the request for comment provided only 30 days to respond which is an insufficient timeframe for commenters to reasonably provide meaningful responses given the extensive scope and breadth of the request. The letter urged the SEC to continue to receive and review comments from the public, retail investors, the industry, and others following the close of the comment period and to coordinate with other regulators examining similar issues.

The full comment letter and can be found here.

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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 nearly 1 million employees, we advocate for 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). For more information, visit http://www.sifma.org.