SIFMA Urges SEC to Overhaul Communications Retention Rules

SIFMA supplemented a previously submitted letter urging the SEC to modernize the agency's communications recordkeeping framework. In the new letter, SIFMA provided survey data which showed that recordkeeping rules impose enormous costs on broker-dealers and investment advisers while generating far more data than regulators need.

In the original letter, dated October 2025, SIFMA asked the Commission to amend the communications rules to clarify the types and scope of communications that must be retained under the federal securities laws and to provide safe harbors for compliance with each of the communications rules. These rules are applicable to broker-dealers, investment advisers, and security-based swap dealers, including SEA Rule 17a-4 ("Records to be preserved by certain exchange members, brokers and dealers,") and SEA Rule 18a-6 ("Records to be preserved by certain security-based swap dealers and major security-based swap participants,") and IAI Rule 204-2(a)(7) ("Books and records to be maintained by investment advisers") (together, “Communications Rules”).

In the supplemental research, SIFMA and SIFMA Asset Management Group ("SIFMA AMG") found that large firms retained as many as 28 million communications on a single weekday - over one trillion per year - while smaller firms retained upward of 250 million annually. Forty-four percent of surveyed firms reported they had not permanently deleted communications their own policies deemed non-essential, citing enforcement risk. Annual storage costs ranged from $80,000 to approximately $37 million per broker-dealer and from roughly $500,000 to more than $10 million for investment advisers. Firms also reported devoting between 2,000 and more than 42,000 staff hours annually to retention compliance, separate from supervision and surveillance.

SIFMA attributed the over-retention to rule ambiguity and enforcement risk, arguing the framework encourages defensive data hoarding. SIFMA said that firms relied on between three and fifty third-party vendors to capture communications across email, text, chat, and video - a fragmented architecture SIFMA said results from applying legacy rules to a rapidly expanding ecosystem. SIFMA warned the burden is growing as firms address compliance questions raised by generative AI.

SIFMA proposed narrowing required retention to communications involving registered persons, which survey respondents estimated would reduce volumes by 15 to 45 percent and generate annual savings of up to $5.5 million for the largest firms. It also urged the SEC to reduce the retention period from six years to three, which advisers said could cut storage costs by up to 50 percent. One-time implementation costs were estimated at between $6,250 and $500,000 depending on firm size. In the original letter, SIFMA proposed to eliminate the requirement that a third party, such as a cloud service provider, must file a third-party commitment to provide access to the broker-dealer’s documents under SEA Rule 17a-4(i).