Keeping on top of regulations can be challenging, especially in highly complex industries like finance. Regulations such as MiFID II and the upcoming MiFID III mean that compliance is more important than ever. The various MiFID regulations refer to the role of telephony, along with specific requirements for how phone calls should be conducted, recorded and stored.
This article will help you understand how to ensure your company complies with the MiFID regulations' telephony requirements, and how to simplify the process.
About MiFID:
MiFID II, which came into effect in 2018, is a big upgrade from MiFID I. It's aimed to address weaknesses in the financial markets and keep up with new technology. The regulations cover lots of aspects of investment services, like trading and how information is handled. The main idea is to enhance transparency, protect investors, and keep the market fair.
MiFID III goes further, expanding the remit to include retail customers, among other changes.
Key areas affected:
- Investor Protection: Look out for the people who invest to ensure they are not exploited or put at unnecessary risk.
- Transparency: MiFID II aims to increase transparency in financial markets by introducing requirements for the publication of trade data, the use of trading venues, and the reporting of transactions to regulators.
- Market integrity: MiFID II includes measures to prevent market abuse and enhance the integrity of financial markets. This includes stricter rules on the monitoring and reporting of suspicious transactions, enhanced supervision of algorithmic trading activities, and the introduction of position limits for commodity derivatives.
MiFID II and telephony
MiFID II mandates recording all telephone and electronic communications related to activities aiming to finalise transactions or provide client order services, even if they don't lead to actual transactions. This includes mobile conversations, emphasising the need for a comprehensive recording approach.
There are three primary reasons behind this recording requirement:
1. Dispute resolution: Recorded evidence aids in resolving disputes between firms and clients.
2. Code of Conduct supervision: Supervisory bodies within firms benefit from recorded communications to ensure adherence to codes of conduct.
3. Market Abuse Deterrence: The recordings enhance detection capabilities, acting as a deterrent against market abuse.
In line with MiFID II, investment firms must take reasonable steps to record relevant communications on firm-provided equipment. This obligation extends to preventing employees from using personal, unrecordable devices for such communications.
Importantly, the directive's emphasis on mobile phone recording isn't new; it dates back to 2010. While the cost of recording mobile phones has decreased, MiFID II maintains the requirement.
To protect themselves, firms are advised to provide mobile phones to covered employees, ensuring control, oversight, and policy adherence. The directive's comprehensive nature mandates recording all relevant communications, emphasising a holistic approach to compliance.
MiFID regulations also place specific requirements on how phone calls should be recorded and how those recordings should be stored. For example:
- Record all calls which could result in transactions
- Inform customers that the conversation is being recorded
- Store all recordings for a minimum of five years
- Quickly and easily retrieve all communications related to a specific transaction or in a given time.
There are also technical requirements on how systems should be set up, mandating that recordings are started automatically rather than relying on manual activation and specifying the permitted time allowance for data transfer and retrieval.
How to simplify the MiFID compliance process:
All these regulations can be overwhelming, but it is possible to streamline and simplify the process. It’s recommended to use native call recording directly within your telephony system to avoid any potential delays or manual processes. Additionally, dedicated compliance platforms can be utilised to ensure that those recordings are transmitted and stored correctly.
The most efficient way to ensure compliance is to use integrated systems rather than trying to manage several different platforms that don’t communicate with one another.
Telavox's MiFID package
The Telavox MiFID package is tailored to the specific requirements of banks, financial advisors, stockbrokers, traders, hedge funds, and insurance companies. Specifically, it simplifies recording maintenance, allows timely reporting and establishes a robust data management system.
Native recording and integrated storage
With Telavox’s call recording feature, you can record calls directly within the telephony system, simplifying your tech stack and ensuring automatic activation. These recordings can be integrated directly with Touch’s archiving platform, meaning your compliance process is handled automatically.
Audit trails and historical data:
A key aspect of MiFID that many companies struggle with is accessing previous communications. Telavox’s integration means you can effortlessly access historical data for dispute resolution, audit trails, inspections, documentation, monitoring, and notifications.
How can Telavox help with MiFID compliance?
1. Seamless automatic native call recording for relevant communications.
2. Comprehensive compliance management with our partner Touch Call Recording, which specialises in archiving and monitoring, will ensure ongoing compliance with MiFID regulations.
3. Secure and streamlined integration of BankID before or during phone calls to ensure two-factor authentication (2FA), enhancing identity verification in financial transactions.
4. Future-proof solution and a one-stop-shop for archiving and audit log requirements of your calls.
Conclusion:
MiFID regulations require businesses to understand the role of telephony in customer interactions. Requirements for call recording and the storage and management of that data can sound complex. However, by utilising native call recording and combining that with dedicated storage platforms and identity verification, you have the building blocks for a powerful yet straightforward compliance process.
Please keep in mind that the above post is not meant as legal advice and is just a description of Telavox's and its partners' product offering.
