The Securities Industry and Financial Markets Association (SIFMA) and SIFMA Asset Management Group (AMG) are urging the Securities and Exchange Commission (SEC) not to move forward on a proposal related to predictive analytics.
The proposed rules would require the elimination or neutralization of the use of predictive data analytics (PDA) and PDA-like technologies by broker-dealers and registered investment advisors (RIAs). In a comment letter, SIFMA President and CEO Kenneth Bentsen, Jr. said these rules would impose “unreasonable and unworkable” requirements on brokers and advisors and would limit their ability to use technology to provide information and services to their clients.
“These impractical limitations would harm market efficiency, competition, and investors,” Bentsen wrote to the SEC.
SIFMA and SIFMA AMG said the existing regulatory regime for investor communications by brokers and advisers is robust, reasonable, and effective. Further, the SEC has not shown any evidence or reason to justify new rules for their current or future uses of technology.
In addition, they said 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. SIFMA said that would burden many uses of technology that are unrelated to the commission’s limited stated concerns. Also, they said the proposed rules would impose substantial and unjustified burdens which prevent a vast array of beneficial investor interactions and advisory practices.
Instead, SIFMA urges the SEC to consider more appropriate ways to address potential risks related to the use of PDA-like technologies.