As you have probably heard or seen, come the start of next year MiFID II will come in to play If you are still unsure what this is or how it will effect your business or organisation hopefully this document will give you some jargonless information that will explain what is required of you.
MiFID is the Markets in Financial Instruments Directive, commonly known as MiFID II. First introduced in 2008 by the EU after the financial crisis, MiFID is a set of reforms for the financial industry and it replaces the original directive with a more structured conduct to your business. This includes a far more robust set of rules around phone calls and that they need to be recorded and stored.
So who needs comply by these new rules? Any organisation providing financial services to clients linked to ‘financial instruments’ will have to record and store all communications, this includes mobile communications, intended to lead to a transaction. Unlike the current FCA regulations, which are specific to those directly involved in financial trading, with MiFID II any organisation that’s even giving advice that may lead to a trade or investment will need to comply with this rule.
What do you need to record? Currently the FCA mandates say that fixed line and mobile calls must be recorded. However under the new MiFID II regulations, its be required that all conversations ‘that are intended to lead to a transaction’ must be recorded, broadened from the previous mandate of ‘client orders and transactions.’ MiFID II also includes other communications such as mail, fax, email or audio recording of client orders placed during face-to-face meetings that are intended to result in a trade
How must you store your recorded calls? At present with the MiFID II regulations recordings must be stored for a minimum of five years from the date the record was made, and in some cases seven years. All records must be kept in a ‘durable medium’ so that they can be effectively monitored for compliance, it also needs to be replayed or copied if required easily. The original recording can not be deleted or altered it must be stored in a way that makes them accessible and readily available to the FCA on request.
You will need all your recordings to be monitored on a periodic bases within the new rules. The monitoring is specified as ‘risk-based and proportionate.’ Organisations will also need to prove that the appropriate policies, procedures and management of recording rules are in place and that management have clear oversight of these. Organisations must then periodically re-evaluate the effectiveness of their recording procedures and adopt alternative or additional measures if necessary.
Get in touch with Cactus today on 0330 333 2 333 or email me at firstname.lastname@example.org to find out more about how MiFID II is going to impact your organisation and how we can help you comply with these new regulations.