SEC proposes shift to electronic delivery as default for investor information

The US Securities and Exchange Commission has proposed Regulation E-Delivery, a significant overhaul of how financial information is distributed to investors. The rule would expand the ability of issuers, broker-dealers, and investment advisers to use electronic delivery to satisfy requirements under federal securities laws, effectively making digital access the default method.

Under the current framework, regulatory information is typically delivered in paper format unless a recipient affirmatively elects to receive it electronically. The proposed rule would reverse this presumption, allowing electronic delivery without prior affirmative consent, subject to specific conditions. This change is designed to supersede the Commission’s decades-old, guidance-based approach to e-delivery.

SEC Chairman Paul S Atkins described the proposal as a necessary step to harness technology for the benefit of everyday investors. In a statement, he noted that in an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic, not a standard. The Commission stated the move would provide savings to issuers, market intermediaries, and investors in paper, printing, and postage costs.

The scope of information deliverable electronically under the proposed rule is broad. It includes prospectuses for funds and other issuers, fund annual and semi-annual shareholder reports, proxy statements, trade confirmations, disclosures pursuant to Form CRS, and Form ADV Part 2 Brochures. The Commission highlighted that e-delivery offers the opportunity for more personalised, interactive, timely, and efficient disclosure experiences.

For investors currently receiving information in paper format, the proposal includes a transition process. These recipients would receive two paper notices regarding the upcoming transition to e-delivery, which would provide information about the change and the ability to opt out. The right to receive paper format upon request is preserved under the new rule.

The public comment period for the proposal will remain open for 60 days following its publication in the Federal Register. The move reflects how today’s market participants use electronic media to provide and access information, aiming to improve accessibility and retention benefits for investors.