The Markets in Financial Instruments Directive (MIFID II) came into effect on 3rd January, with the aim of regulating financial markets throughout the European Union and providing protections for businesses, their clients and investors, as well as the industry as a whole. It highlights transparency and fairness, ensuring investors gain the fairest deal as per their requirements, and regulators can keep tabs on businesses, picking up on market manipulation or any abnormalities. As it also concerns communication recordings and data security which are services we provide, we want to break down this directive, looking at key changes, the benefits, challenges and how we can help safeguard your business.
The Main Objectives Of MIFID II:
- After the financial crisis of 2007-8, regain trust.
- Increase competition within the financial industry.
- Strengthen supervisory and regulatory bodies.
- Reduce risk, creating a trustworthy, transparent and secure financial system.
Who MIFID II Applies To:
A whole host of firms, including, but not limited to:
- Interdealer Brokers.
- Venture Capital Firms.
- Financial Advisors.
- Trustee Firms.
- Data Reporting Service Providers.
How MIFID II Might Have Affected Your Business:
Whether in written note or recording form, conversations relating to transactions, whether they be between clients or colleagues, must be documented.
As Article 16(7) of MIFID II states:
“Records shall include the recording of telephone conversations or electronic communications relating to, at least, transactions concluded when dealing on own account and the provision of client order services that relate to the reception, transmission and execution of client orders.”
Electronic communications include mobile, VoIP and video conferences.
Businesses that decide to note-take must record information such as the date and time of any related meetings, their locations, information on orders placed (e.g. price, volume and type of order) and the reasons for the order.
On the other hand, conversation recording may involve an investment in systems that enable this function, regardless of the location or technology used. This system would not only increase operation efficiency but ensure that clients are being delivered what was promised.
Whichever option businesses choose, records must be protected and safely stored to prevent tampering or destruction. When choosing a storage solution or company, accessibility is also key as the Financial Conduct Authority (FCA) may require records to review at 2 days’ notice. Staff training, in terms of recording, data protection and requests is advised for complete control. Businesses must preserve their data for at least 5 years.
Further, when it comes to face-to-face recordings, Recital 57 states:
“Where minutes are taken of face-to-face conversations with clients, Member States should ensure that appropriate safeguards are in place to ensure that the client does not lose out as a result of the minutes inaccurately recording the communication between the parties. Such safeguards should not imply any assumption of liability by the client.”
In other words, these systems are the responsibility of the business and the client is in no way liable for the documentation of face-to-face meetings.
The Benefits Of MIFID II:
- Allows businesses to resolve disputes between clients faster and with certainty, especially with recordings.
- Provides regulatory bodies with access to records to identity market abuse.
- Creates order within businesses as they record, safeguard and access data in a more efficient way. This protects the company and their clients, creating trust and repeat business.
- Standardization across the board as all communication is recorded.
But therein lies the key challenge of MIFID II: The necessity to continuously and successfully deal with large amounts of data.
How Can Infinitel Help Companies Comply with MIFID II?
Infinitel provides business phone systems which include all of the features and functionality needed to comply with MiFID II.
With our call recording solutions, recordings can be indexed by time, agent/employee, date, group, and a variety of other formats, resulting in hassle-free, instantaneous record retention, search, and retrieval.
Call Recording for Mobile Phones
Infinitel can also provide you with call recording on your business mobiles as part of our business phone system. Our smartphone app can be installed on all your business mobiles, enabling you to record all calls.
Call Infinitel on 0333 996 0029 today to find out more about our call recording solutions and how we can help you meet the requirements for MIFID II.