Electronic delivery could become the default channel for investment firms and issuers to communicate with investors under reforms being proposed by the U.S. Securities and Exchange Commission (SEC).
On Thursday, the SEC proposed a new rule that would enable broker-dealers, investment advisors, and issuers to rely on electronic delivery to satisfy disclosure delivery requirements without first getting consent from investors — shifting from the current situation where paper delivery is the default and firms need consent to provide disclosure electronically.
Under the proposals, the sorts of disclosures that could default to electronic delivery includes prospectuses, shareholder reports, proxy statements and trade confirmation, among other things.
“The commission’s new e-delivery approach is designed to address concerns that issuers, market intermediaries and, ultimately, investors and other recipients of information under the federal securities laws may be bearing unnecessary costs and expenses associated with a default delivery method that no longer reflects the preference of most investors,” the SEC said.
In addition to the compliance cost savings that a move to more widespread e-delivery could provide, the SEC said it’ll also make it easier for firms to provide investors with “more personalized, interactive, timely, and efficient experiences with disclosure than paper delivery.”
The proposal, which will go out for a 60-day comment period following its publication in the Federal Register, includes a transition process that would require firms to give investors two paper notices about a planned transition to e-delivery, and provide the ability to opt out, before electronic delivery takes effect.
Earlier this month, the Canadian Securities Administrators announced the adoption of final rules allowing issuers to meet their delivery requirements for certain disclosures — such as annual and interim financial reports — by providing electronic access to those documents, and alerting investors to their availability, without directly delivering the disclosures to investors. That new regime takes effect on Sept. 22.