Data Supporting the Modernization of the Communications Retention Requirements

Summary

SIFMA and SIFMA AMG provided data to supplement their October 15, 2025 letter ¹ regarding the Securities and Exchange Commission's (SEC) communications recordkeeping requirements. The survey data now available confirms what SIFMA previously warned: the current framework is driving massive over-retention, extraordinary costs, and operational inefficiencies that far outweigh any perceived investor protection benefits.

Excerpt

To support this conclusion, SIFMA conducted small informal surveys of both broker-dealers and investment advisers representing a broad cross-section of the industry. Respondents included broker-dealers and dual registrants, firms ranging from fewer than 500 employees to more than 20,000 employees, firms with registered person populations ranging from fewer than 250 to more than 10,000 registered persons, and investment advisers with assets under management ranging from less than $500 billion to more than $1 trillion. The results are consistent across both populations and confirm that the current communications retention framework is producing the same distortions across the securities industry.

A. The Current Rules Drive Systemic Over-Retention

Firms reported retaining high volumes of communications of all types. Large firms reported retaining 28 million communications on ONE typical weekday, with several smaller firms reporting volumes in the hundreds of thousands to over 1 million daily communications. This means that smaller firms may be retaining over 250 million communications per year and large firms are retaining over 1 trillion communications per year. These volumes include large amounts of content that are not required records but are nevertheless retained due to ambiguity and enforcement risk. This is reflected in firm behavior: 44% of firms reported that they have not permanently deleted communications that the firm determined were not required to be retained, even where the firm had a document destruction policy. That result is not surprising. In the current environment, firms often conclude that the operational and regulatory risk of deleting communications is far greater than the cost of retaining them.

The result is a regime that encourages defensive over-retention rather than principled, risk-based records management. That outcome does not improve regulatory oversight; it increases the amount of low-value data that firms, regulators, and litigants must search, review, and process.

Investment adviser responses confirm that these dynamics are not limited to broker-dealers. Advisers reported retaining approximately 96,000 to 1 million communications per day, with one adviser reporting approximately 8 million emails daily in addition to 70,000 Zoom and Teams messages. These volumes mirror broker-dealer volumes, reinforcing that the current framework is driving systemic over-retention across regulated entities, not just for broker-dealers.

B. The Financial Burden Is Enormous

Annual communications retention storage costs reported by broker-dealers and dual-registrants ranged from $80,000 to approximately $37 million per firm, with multiple firms reporting multi-million-dollar annual spend. Investment adviser responses reflect similarly significant cost burdens. Advisers reported annual storage costs ranging from approximately $502,168 to more than $10 million, with other respondents reporting approximately $1.8 million and $1.9 million.

This is not a marginal compliance cost. It is a structural reallocation of resources away from higher-value compliance activities - including supervision, surveillance, training, and controls - toward storing, processing, reviewing, and producing vast quantities of low-value data.