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Securities Industry Wins Right to Paperless Trade Confirms

Goldman Sachs, Merrill Lynch and other firms have convinced the SEC that paper disclosures are no longer necessary for trade confirmations

A group of broker-dealers and investment managers, including operations managers from Goldman Sachs and Merrill Lynch, has convinced the Securities and Exchange Commission to grant a no-action letter to Omgeo, voiding the need for paper disclosures associated with trade confirmations. This change is expected to eliminate several hundred million pages of paper from the securities industry each year.

The SEC letter states that providing access, via a URL, to the pages of disclaimers and disclosures that brokerage legal and compliance functions typically include on the back of a trade confirm (known as the "confirm disclosure") is sufficient for compliance to Exchange Act Rule 10b-10 (a). Previously, despite the availability of electronic confirms, the information contained in the confirm disclosure had to be sent in hard-copy form, which resulted in cost and inefficiencies associated with large amounts of paper, storage fees and postage.

"The Omgeo electronic confirmation leverages electronic media for confirm disclosure and eliminates an inefficient paper delivery process," said Steve Kelly, vice president, operations at Goldman Sachs. The Omgeo repository that will house TradeSuite confirm disclosures will be available later this year.

"The industry has truly rallied together to achieve some much-needed change," said Patti Lewis, director of global debt markets at Merrill Lynch. "We first broached the need to streamline the process within the old Bond Market Association for fixed income, but are pleased we will be able to leverage the solution within equities as well, as a multi-asset class approach will help make our markets that much more efficient. Additionally, this initiative will allow the investment community to streamline their cost allocated to paper processing and distribution."

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