MiFID II

The Markets in Financial Instruments Directive, commonly known as MiFID II, is due to come into force in January 2018. First introduced by the EU in response to the 2008 financial crisis, MiFID II is a set of sweeping reforms for the financial industry designed to prevent history from repeating itself in the same way again. The new legislation governs everything from where and how derivatives can be traded, to measures for reducing volatility and policing potential conflicts of interest among financial advisers.

Recording Calls

The Financial Conduct Authority (FCA) currently mandates that only the telephone conversations of individuals directly involved in trading need to be recorded, but MifID II broadens the scope considerably to include anyone involved in the advice chain that may result in a trade. Naturally, this has a significant impact regarding the scope of whose conversations must be recorded once the new legislation takes effect.

Conversations between the likes of wealth managers or independent financial advisors and their clients will now all fall under this scope, where previously they did not. Furthermore, the legislation applies to both fixed line and mobile conversations, and all calls must be stored and accessible for a minimum of five years after taking place (seven in some instances).

How to achieve MiFID II

Before MiFID II was announced, few financial institutions had the infrastructure in place to meet these new rules and many are still working on how best to achieve the compliance requirements. Fortunately for those that don’t have the necessary in-house resources, Aeriandi have call recording and archiving solutions which can help you achieve compliance.

Considerations

While the list below is by no means exhaustive, it should serve as a strong benchmark upon which to review potential solutions, as any offering that doesn’t meet these considerations is unlikely to completely fulfill the requirements set out by MiFID II and should therefore be avoided:

Coverage of all required telephone platforms

MiFID II mandates that calls must be recorded across both mobile and landline platforms, so it is critical to ensure any solution being looked at has the capability to do this, as many out there cannot.

Easy implementation and scalability

Aeriandi’s cloud-based recording and archiving solutions do not require any on-site installation, eliminating disruption incurred as a result. Scalability is also a major factor.  Our solution can scale both up to cover busy periods, whilst scaling down to save your organisation money during quieter periods?

Access to call recording archives from anywhere

Cloud-based recording and archive solutions offer the ability to access call recordings and archives from anywhere, at any time via a secure online portal. This is particularly beneficial to organisations spread over multiple sites or countries.

Secure storage and encryption to protect recordings

MiFID II mandates that call recordings relating to a financial transaction must be stored for five years after the transaction was made, a significant rise from the six month period currently mandated by current FCA legislation. Not only does this impact heavily on storage resources, but it also presents security challenges, particularly if the recordings contain sensitive financial information. Our recording and archive solution offers the latest levels of data encryption and provides guarantees about who is able to access recordings.

Compliance with additional data standards

Aeriandi’s solutions available also offer additional layers of compliance such as the Payment Card Industry Data Security Standard (PCI DSS) and BS10008; governing whether recorded content is legally admissible in court if required.

MiFID II Survey - Are You Ready?

Aeriandi recently undertook a survey of 250 IT decision makers and Risk and Compliance Managers working in the Financial Sector in companies that process payments transactions over the phone and have 1000+ employees.

The study was to gain an insight into the understanding of MiFID II within these companies. To download the full survey results, please see below.

Key Findings
  • 73% unaware of penalties of up to 5 million euros or 10 % of annual turnover
  • 17% are unaware a company can receive a cease and desist order for non compliance
  • Over a 1/4 do not have the technology or the infrastructure needed in place for compliance
  • 22% say that although they feel they understand MiFID II, they are not sure how it applies
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