|Wednesday, June 18, 2003
Nancy A. Condon 202-728-8379
Michael Shokouhi 202-728-8304
NASD Provides Members Guidance Regarding Instant Messaging
Washington, DC — NASD today advised member firms about the use of "instant messaging" by employees, saying firms must ensure the instant messaging is being retained for at least three years and the communication does not violate NASD rules governing sales literature and correspondence. The advisory was issued in a Notice to Members.
"NASD recognizes that instant messaging is becoming increasingly popular as a real-time method of communicating and we want to be clear about our expectations for its use," said Mary L. Schapiro, NASD Vice Chairman and President of Regulatory Policy and Oversight. "Firms have to remember that regardless of the informality of instant messaging, it is still subject to the same requirements as e-mail communications and members must ensure that their use of instant messaging is consistent with their basic supervisory and record keeping obligations."
Instant messaging is a developing technology that can pose supervisory and record keeping challenges for NASD member firms. Consumer versions of instant messaging do not always provide business users with tools to monitor or archive instant messaging communication. Many firms have determined that they cannot adequately supervise instant messaging communications and have banned the use of instant messaging for communication with the public. Members are advised to evaluate instant messaging according to the "content and audience" of the instant messaging communications.
NASD members must supervise the use of instant messaging the same way they currently do for written and electronic communications. If a member firm is unable to establish an adequate supervisory program, the member must prohibit the use of instant messaging by its employees in customer communications.
The Notice to Members details the applicable NASD and SEC rules and guidelines to assist registered representatives and firms in their use and supervision of electronic communications with the public.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit our Web Site at www.nasd.com.