SEC Modernizes Financial Disclosures With Digital-First Delivery

The Securities and Exchange Commission (SEC) is moving to make electronic delivery the default for many financial disclosures, replacing rules that still favor paper documents despite the widespread use of online banking and investment services.

CFE supports the SEC's proposed Regulation E-Delivery. The change would modernize outdated delivery requirements, reduce printing and mailing costs, and give investors faster access to financial information. Investors who prefer paper documents would retain the option to receive them.

SEC Updates Outdated Delivery Rules

The SEC's existing framework for electronic delivery is rooted in guidance developed beginning in the 1990s, when online financial services were still emerging. Today, Americans routinely use websites and mobile applications to manage bank accounts, investments, retirement savings, and other financial services.

Investor preferences have shifted accordingly. SEC research found that nearly 80 percent of U.S. investors prefer some form of electronic delivery for financial disclosures that do not contain personal information. Approximately 63 percent prefer electronic delivery even when documents contain personal information.

Regulation E-Delivery would recognize that shift by allowing issuers, broker-dealers, investment advisers, investment companies, and other covered entities to use electronic delivery as the default for required disclosures, subject to SEC requirements.

The proposal covers a wide range of financial documents, including prospectuses, annual and semiannual shareholder reports, proxy statements, trade confirmations, and certain investment adviser disclosures.

Electronic Delivery Reduces Unnecessary Costs

Requiring financial firms to rely on paper by default carries significant costs. Printing, processing, and postage expenses add to the cost of providing financial services and can ultimately be passed along to investors.

SEC Chairman Paul S. Atkins has cited the expense of paper delivery and its potential effect on investor returns in making the case for modernization. Moving to electronic delivery would reduce those expenses while allowing financial institutions to distribute required information more efficiently.

Electronic delivery provides practical benefits for investors as well. Documents can arrive faster, be searched electronically, and be stored without maintaining years of physical records.

Financial institutions have already invested heavily in websites, mobile applications, electronic statements, and secure customer portals. Federal disclosure rules should reflect a financial system in which electronic communication has become standard practice.

Investors Can Still Choose Paper

The SEC's proposal changes the default method of delivery without eliminating paper statements.

Investors who prefer physical documents would continue to have that option. The proposal includes additional protections for investors who currently receive paper documents. Before moving those investors to electronic delivery, covered firms generally would have to send two paper notices explaining the transition and the investor's right to continue receiving paper.

Those protections preserve access for seniors and other investors who prefer or rely on physical documents. Investors can choose the delivery method that works best for them without requiring the entire financial system to operate under a paper-first default.

CFE Takeaway

CFE supports the SEC's move to make electronic delivery the default for financial disclosures. The proposal updates outdated rules, reduces unnecessary costs, and reflects how Americans increasingly manage their finances.

Investors who want paper statements will remain free to receive them. For everyone else, federal rules should recognize what has already become standard practice across much of the economy: financial documents can be delivered more quickly and efficiently online.