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NEW YORK: Try to imagine Wall Street getting through one day without cellphones, BlackBerrys or messages sent through Bloomberg terminals.
No, really.
Every day, millions of dollars are potentially at stake as electronic communications whiz through the air. Yet that ever-expanding number of ways to communicate - like handheld BlackBerrys, text messages and instant messaging - have raised concerns about the spread of confidential information through unsecure devices.
In response, the industry's two self-policing groups, NYSE Regulation and NASD, were expected Thursday to release proposed guidelines for the regulation of written electronic communications, including internal and external exchanges.
The guidelines represent nearly two years of work by a committee of NYSE Regulation and NASD representatives, Wall Street firm members and lawyers, as well as contributions by the Securities and Exchange Commission.
They are intended to clarify how forms of communication unimaginable when the rules were last revised, in 1998, fit into existing regulations, said Grace Vogel, the executive vice president of NYSE Regulation who led the committee. But some outside the committee said that regulation and enforcement would undoubtedly follow.
"I expect that the codification of these best practices has little practical effect other than in bringing regulatory actions against their members," said Ron Geffner, a lawyer at Sadis & Goldberg who previously worked at the SEC.
James Cox, a professor of corporate and securities law at Duke University, said the new proposal was a small but important step. "It won't be the last whack at the problem," Cox said. "But it's a modest beginning."
Though Wall Street has learned the consequences of paying too little attention to messages zipping through its corporate pipelines, other ways of communicating have cropped up faster than regulators have been able to address them.
What has emerged in the latest revision is a series of recommendations on how to monitor text-based communications from these firms. The overarching principle: If firms cannot supervise or review the messages, or if the sender cannot be identified, they should consider blocking them from the workplace.
The goal is not to deprive bankers, traders and brokers of their BlackBerrys or market terminals, said Ben Indek, a partner at Morgan, Lewis & Bockius and a committee member, but to offer companies guidance on how to monitor their use.
While many firms have already addressed some of these concerns - like blocking sites for personal e-mail messages - Vogel said many Wall Street executives felt that regulators needed to address the issue more broadly.
In addition, the guidelines suggest that brokers should limit the use of their personal cellphones and that companies should not allow the use of instant messaging or PIN messaging if they cannot monitor it properly.
Among the discussions at the inaugural meeting was defining "electronic communications." The task took three hours, Vogel said.
One of the ground rules the committee worked under was that any proposals would emerge as principles rather than rules.
The decision, members said, underscored concerns about cost, as smaller firms worried that they could not institute the types of systems used at larger companies. Instead, the proposal urges firms to consider what is appropriate for their size and business models.
"We didn't necessarily want mechanistic guidance, that you must look at 'x' number of e-mails," said Marc Menchel, executive vice president and general counsel at NASD.
Another reason was a recognition that a list of guidelines could more easily accommodate the rapid evolution of technology. Rather than a list that prohibits means of communication, the guidelines lay the groundwork for a wider scope, so as not to limit regulators in addressing the BlackBerrys of tomorrow.
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