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FinTech Trends Newsletter Week 20th November – 24th November 2017
The top 4 MiFID II call recording myths, debunked
Most financial services firms are well aware by now that the MiFID II (Markets in Financial Instruments Directive) will mean a major shake-up of their industry, when it comes into effect in 40 days’ time, on Wednesday, 3rd January, 2018. Buried somewhere within the Directive’s mighty manuscript 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. I’ve put to rest some common misconceptions.
Myth: I will only have to record orders and transactions.
Fact: This was true under the original 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, asset managers, hedge funds, wealth managers, alternative investment managers 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: You did have and you still do. Actually, the delay of the original deadline for implementation of MiFID II from January 2017 to January 2018 did 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. 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).
Although only 40 day to go until MiFID II comes into force on January 3rd, 2018, Buyside and Financial Firms still have time to implement a voice recording & data management solution, even at this late stage via Storm IT Financials’ MiFID II Call Recording & Data Compliant Solutions that Records, Retains (7yrs+), Reviews and Reconstructs your calls, all in a Resilient portal on your desk top, that can even be installed in managed serviced offices, where firms use landlord infrastructure, that have caused problems in the past.
So our advice is seek guidance, have those tough conversations now and don’t delay, as there IS STILL time………just about.
MiFID II is being introduced on the 3rd January 2018 will have consequences for the way in which your firm and your IT managed services provider manages its IT systems. Understanding MiFID II is the first step towards putting in place the necessary systems and processes to meet the new requirements. Cont act Storm IT Financial for help and guidance about MiFID II and it’s effects on your firm, our MiFID II Call Recording & Data Compliant Solutions and how you can align your IT systems to the directive’s requirements
Storm IT Financial FinTech News & Trends picks: Week 20th November – 24th November 2017
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MiFID II: European rules, global repercussions
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Asset management firm Tobam plans to launch Europe’s first bitcoin mutual fund as crypto interest grows:
