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The top 4 MiFID II call recording myths, debunked.

Posted 22/06/17

Nxtera solves voice recording technology, process and policy challenges with automation solutions to help financial firms address MIFID II requirements before the fast approaching deadline.

Most financial services firms are aware by now that the Markets in Financial Instruments Directive (MiFID II) will mean a major shake-up of their industry, when it comes into effect in just under a year from now.

Buried somewhere within the Directive’s mighty tome is a page of new rules around the recording and storing of business calls and conversations. But the scale and complexity of the changes have resulted in uncertainty around how they will apply, to who, and what needs to be done to prepare. We’ve put to rest some common misconceptions.

Myth: I will only have to record orders and transactions.

Fact: This was true under MiFID, but the revised Directive is far broader in scope. The recording requirements under MiFID II include all conversations that are intended to lead to a transaction or trade, even if they ultimately don’t. These rules apply equally to firms dealing with their own account as well as providing services for external clients.

Myth: I won’t need to record face-to-face meetings.

Fact: It depends what you class as ‘need.’ Since 2011, the recording rules under MiFID have included both fixed-line and mobile calls, with mobile, landline calls and electronic communications now treated in the same manner.

Under MiFID II, face-to-face meetings that intend to result in a trade are considered ‘equivalent’ to those orders made by telephone, and need to be documented in a ‘durable medium’. They will also need to be accurate enough to provide irrefutable evidence in the event of a dispute.

Myth: MiFID II won’t apply to me.

Fact: It may do. Under current rules, only those individuals directly involved in trading, such as banks, stockbrokers, investment managers and financial and commodity derivatives firms need to record their conversations.

MiFID II, however, includes those who are currently exempt from having to record such as financial advisors and brokers – anyone involved in the advice chain that may lead to a trade or investment.

And the Financial Conduct Authority (FCA) is still consulting on the exact implementation of the rules in the UK, in view of including many more people.

Myth: I have plenty of time to prepare.

Fact: Actually, the delay of the original deadline for implementation of MiFID II from January 2017 to January 2018 could lull firms into a false sense of complacency.

Considering the scale and complexity of the changes, they have a relatively short amount of time to put new processes and tools in place. As Finextra journalist Jeremy Taylor explains, the delay itself is an indication of just how huge a technology challenge MiFID II presents.

The challenge is made even more complex when you consider that firms’ MiFID II programmes have to be designed alongside overlapping legislation such as the EU General Data Protection Regulation (GDPR).

So our advice is don’t delay.

 

The top 4 MiFID II call recording myths, debunked

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