The NASD has advised its members that they must save all instant message communications for at least three years and ensure that those messages follow guidelines for sales literature and correspondence. Similar rules already apply to the use of e-mails.
Independent broker/dealers will probably ask their employees and registered representatives to restrict or do away with instant messaging rather than submit to the onerous task of keeping records of such communications, consultants said.
Particularly in todays post-boom era of conservative investing and careful asset allocation, rapid-fire communication is not a business necessity for most representatives. Unlike active traders, they rarely use instant messaging for communications with clients, each other or broker/dealer management. And most execute orders through their broker/dealers own technology platform.
"For the average rep, it's not crucial to business," said Rick Cortese, vice president of consulting for NRS, in Lakeville, Conn. "I doubt they use it to communicate with clients. I dont see them using this as a tool for virtual seminars for their clients," he added, with a laugh. "For broker/dealers, its just another adventure in burdensome electronic record-keeping. The nightmarish aspects of keeping this on a server for three years arent worth it, so maybe firms that have IM capabilities will restrict them to the most dire emergencies."
Unlike e-mail, consumer versions of instant messaging products, like AOL, dont provide any way to automatically save instant messages, and the NASD says in its advisory that many firms have already opted to ban instant messaging because they couldnt adequately supervise its use.