It’s only a few months until the Markets in Financial Instruments Directive (MiFID) II, and its accompanying regulation, the Markets in Financial Instruments Regulation (MiFIR) come into effect. As such, Europe’s banks, brokers, asset managers and the wider financial advisory community must already be aware of the impact these changes are going to have to their operations and technology.
MiFID II: Archiving Requirements
MiFID II brings a whole plethora of standards to bear for financial institutions, which will force them to significantly change their compliance policies and procedures – including the upkeep of corporate mobile messages.
The MiFID II requires firms to record a wide range of telephone and electronic communications with clients, and to archive and maintain them in an efficient manner upon request from the regulator. These electronic communications include those that have been produced or stored on personal computers, tablets, and mobile phones.
The recordkeeping requirements of MiFID II applies to all calls and messages, including recordings of phone conversations on a fixed line or mobile devices, and all electronic communications, including email, social media, instant messaging, text/ SMS messaging and so on, which result in a trade. The very purpose of this new requirement is to promote market integrity, improve security, and encourage all employees to act in an ethical manner that benefits their clients and their company.
The Risk of Non-Compliance
Non-compliance to MiFID II can lead to firms being fined and, in more extreme cases, they may also face legal challenges. In fact, despite the delayed implementation of MiFID II to January 2018, many firms are still at risk of non-compliance by the deadline.
According to a recent study by Sapient Global Markets, only 10% of firms are claiming that they are “very ready” with solutions that ensure compliance with the new regulations. With 90% of buy-side firms at risk, experts are worried that the postponement might have caused complacency among these organizations.
Cian O’ Braonain, Director of the Regulatory Reporting Practice at Sapient, said in an email “It’s inevitable that whenever the word ‘delay’ or ‘postponement’ is used there’s a natural temptation to ease off and become complacent because they now have 24 months to complete the project. That’s incredibly dangerous because the extra time should be used to understand the complexity, the IT requirements and also for testing and re-testing to ensure reporting completeness and accuracy.”
O’ Braonain also warned of the danger that firms might not seek the most efficient solutions that can keep pace with the depth and breadth MiFID II requires, let alone refinements to other regulations, such as European Market Infrastructure Regulation. Even in the U.S., the platform must be able to adapt to changes in regulations such as the Dodd-Frank Act, which also contains mandates about when and what discussions must be recorded.
The Need for a Reliable Archiving Platform
As January 2018 quickly approaches, it’s crucial for financial organizations to spend the next few weeks on examining their operating models and technology platform to ensure compliance in time for the upcoming deadline.
If you don’t have the internal capability to implement the changes needed to ensure that your business is compliant, you can seek external support to help organize and execute activities regarding the implementation, and to provide you with the right technology that suits the archiving requirements.
Businesses like TeleMessage, a worldwide leader in mobile message archiving, electronic records search and analytics, offer their global customer base enhanced capabilities around mobile and fixed-line voice communication within our Mobile Archiver Platform.
Contact us today to learn how TeleMessage platforms can help you achieve compliance with the MiFID II implementation next year.