Trade Associations Ask for More Time to Respond to SEC Proposal on Predictive Data Analytics

A host of trade associations, including SIFMA and the Managed Funds Association, asked the SEC to extend the comment deadline for a proposed rulemaking on the use of predicative data analytics ("PDA") technologies. The joint request for an extension of 60 days included "associations [that] represent a wide range of market participants, including registered investment advisers and broker-dealers, registered and private funds, and institutional as well as individual investors, that would be affected in numerous and significant ways by the Proposal."

As previously covered, the SEC proposed the rule which would require broker-dealers and investment advisers, respectively, to (i) eliminate or neutralize the effect of conflicts of interest arising from the use of PDA technologies and (ii) adopt and implement written procedures to achieve compliance with the proposed conflicts of interest requirements.

In the Letter, the trade associations argued that the proposal "threatens to upend longstanding precedent" and the recently adopted standards for broker-dealers under Regulation Best Interest. The trade associations also argued that despite the SEC’s claims that the proposal is "intended to be technology neutral," the rulemaking’s "incredibly expansive . . . [and proposed] restrictions" would result in a "severely chilling effect on firms’ use of technology."

The trade associations stated that more time is needed in order to provide comments that fully consider the proposal in relation to the "vast scope of proposed rulemakings" that have been issued in the past two years.