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FinTech Trends Newsletter Week 21st August – 25th August 2017
MiFID II, data and compliance – what does the future hold for banks and hedge funds?
Imagine how large your IT department would have to be to fulfil every one of MiFID II – or to give it its full title, the updated Markets in Financial Instru- ments Directive – is an updated set of regulations that covers investment banks, hedge funds and alternative investment firms. It provides a list of are- as where new compliance steps have to be taken by the companies involved
in trading, covering everything from voice recording through to collection of trade data. It’s this area of data collection that will be interesting for these companies to consider.
As with much compliance regulation, the rules have been put together to catch up with the potential that new technologies can deliver.
Invoking the trilogy of variety, velocity and volume should make MiFID II a fairly obvious use case for big data systems. The IT teams at banks are al- ready investing in their compliance efforts to meet the deadline of 03 January
2018, while hedge funds & alternative investment companies with smaller IT organisations are looking at how they can work with providers, like Storm IT Financial, to solve these problems as well.
What is most interesting, speaking to buyside clients and colleague in the industry is how much variation there is in mindset in the IT teams and decision makers involved. Some see the January 2018 deadline as the only end goal, some are already looking at ways to get around the legislation and take things out of scope, while others are looking ahead at what new things can be delivered using the data that has to
be gathered. These differences demonstrate that IT is still seen in very different ways within businesses, from the traditional ‘keep the lights on’ maintenance role through to more strategic and forward thinking.
I say it’s important not to see the deadline as the end goal, but just the starting line. It’s pointless to build solutions that will only cope
with 2 years’ worth of data, when this regulation will be in place for 7 to 10 years. Something we at Storm IT Financial can help with.
Bringing together voice and data compliance plans
Alongside the trade data that IT teams will have to capture, mobile calls and data will also have to be tracked for compliance. Whereas previously, traders could leave their phones away from the trading desk and this would be compliant with MiFID I, MiFID II will force companies to capture all voice calls and data created on phones. This change in the rules may be a difficult one to start off with.
The reason behind this is that, for many people, phones run apps as well as voice calls. While mobile call recording now works at the network level, apps like Facebook, WhatsApp or Linkedin on those phones can also be used to communicate. Each of those transactions would have to be recorded and kept for a minimum of five years+. However, many of these services are fully encrypted, so the data saved would not be clear and it would be very difficult to force employers to release keys to apps that are not actually theirs.
The likelihood is that many firms will have to look at their mobile device management strategies over the next 18 months, preventing people from installing and using these kinds of apps on work phones.
Along with this, companies will have to start planning for their compliance management. An example of this is how compliance officers should listen to a set percentage of calls every month to check that recording of conversations is taking place, as voice calls or “landline” desk phones calls also need to be recorded and the data captured and stored. Together with this, compliance teams should be making preparations on the processes they will use to link up trading data concerning a specific customer account or trader with all the relevant voice calls made by that trader would be required in the event of an investigation.
What is “relevant” is still up for definition, a lot of this will be determined by the first investigations into compliance status by the Fi- nancial Conduct Authority after the initial deadline passes. Being prepared for any questions is going to be a key skill for the future.
Storm IT Financial can help guide, prepare & advise firms on IT, technology, communication so you can deal with the regulatory & compliance burdens now required by the FCA, MiFID II & GDPR. If you’d like more details on communications, voice call recording, data management, disaster recovery, back up, cybersecurity, regulatory & compliance technology and managed solutions for your alternative investment, hedge fund, wealth manager and private equity firm, please contact Storm IT Financial for more information.
Storm IT Financial FinTech News & Trends picks: Week 21st August – 25th August 2017
Security and Compliance in Azure
Security & Compliance are areas of major investment for Azure:
https://azure.microsoft.com/en-us/blog/security-and-compliance-in-azure-stack/
Bloomberg granted FCA approval for MiFID II reporting product
Bloomberg has received authorisation, effective 3 January 2018, from the
FCA for its Approved Publication Arrangement (APA):
LSE approved as APA for MiFID II reporting
LSE plc has today received regulatory approval from the UK’s FCA to be authorised as an APA (approved publication arrangement):
https://www.finextra.com/pressarticle/70456/lse-approved-as-apa-for-mifid-ii-reporting
The Cloud is ready for Banks but are Banks ready for the Cloud?
Of all industries banking has been amongst the slowest to migrate core processing to the cloud……:
AxiomSL launches regulatory education programme for asset managers and broker-dealers
AxiomSL launches new programme designed to assist Buy & Sell side firms clarify issues related to the shifting regulatory environment:
Accenture acquires fintech consulting firm Verax
Accenture has acquired Verax Solutions, a Toronto-based technology and systems-integration consulting firm:
http://www.bankingtech.com/959662/accenture-acquires-fintech-consulting-firm-verax/
Tech giants Amazon, Google and Facebook could be the next threat facing banks and financial services firms
Forget FinTech startups. Amazon, Google and Facebook could be the next big competitors for banks:
http://www.cityam.com/270663/tech-giants-amazon-google-and-facebook-could-next
Firms must ‘urgently’ improve cybersecurity
The Government is warning that the country’s top firms are not prepared for cyberattacks:
High net worth investors are yet to trust robo-advisers
Only 12% of HNW UK investors trust robo-advisers to make investment decisions on their behalf:
Unintended Consequences of MiFID: Job Losses, Trade Turmoil?
With MiFID II deadline less than 5 months away, banks & asset managers are scrambling to prepare……….:
Citing MiFID II, Tabb opens London office
Tabb Group establishes of new office in the City of
London due to growth in its European operations:
https://www.finextra.com/pressarticle/70326/citing-mifid-ii-tabb-opens-london-office?
Five reasons why your business should move to the cloud
Investing in cloud-based systems lowers business costs, improves data security, and boosts collaboration:
the technology & data management of regulatory & compliance burdens now required by the FCA, MiFID II & GDPR.