The revised Markets in Financial Instruments Directive (aka MiFID II) will come into play in January 2017. Though it seems like a long time away, it is important for Financial Institutions to start preparing for it now. If not, they are likely to face tough challenges as well as hefty fines which could be easily avoided with the right preparation.
MIFID II – Main Challenges
MiFID II is a wide-ranging piece of legislation, which depending on the business model could affect multiple functions within a firm, from client services to IT and even HR systems.
The main challenges that organisations will face with MIFID II include:
- Record-keeping for Market abuse directive (MAD) /Market Abuse Regulation (MAR) and Markets in Financial Instruments Regulation (MiFIR).
- Mandatory recording of phone conversations and the retention of all e-communications relating to all transactions – whether placed, executed or cancelled.
- Storage of communications (telephone and electronic) for a minimum of five years – some authorities can enforce as long as seven.
- Secure medium – records must be stored in a medium so that they cannot be changed or deleted and must be available to clients on demand.
- Demonstrating ‘best execution’ to both clients and regulators, together with published information on top execution venues and quality of execution.
- Transaction reporting – which demands the provision of a complete record of all services, activities and transactions in a form that is readily accessible to regulators.
Under MiFID II the demands placed on the organisation for archiving, accessing and retrieving volumes of data around transactions will increase exponentially – how many of the above requirements can you tick off your list today? Failure to do so when MiFID II comes into force could mean your organisation is putting itself at high risk of harsh fines and reputational damage.
What options are available to you?
In order to stay one step ahead of the game, financial institutions should look at how technology can help them successfully achieve and adhere to compliance regulations. For example, Speech Analytics is able to quickly scan large amounts of data and rapidly find calls that correspond with specific compliance requests, thus helping businesses avoid lengthy and inaccurate manual processes. Through Speech Analytics, financial institutions can ensure they are able to consistently meet their compliance obligations.
Moreover, with increasing retention periods, being able to retrieve calls from systems that are no longer supported will be essential. Technology such as Wordwatch aims to do just that by providing one user friendly interface that provides the ability to find calls recorded on different systems, old and new, directly from one place. By implementing the right technology, organisations can help make compliance easier to adhere to and thereby reduce the risk of fines.
Whilst MiFID II is designed to improve the archiving, accessing and retrieving of growing volumes of data around financial transactions, it is clear that as the volume of this digital data increases, so too will the regulatory demands from MiFID II that coincide. Keeping up with these regulations and staying one step ahead of the game has never been more important.
Just how prepared for MIFID II are you?
For more information on your specific requirements, get in touch with our team of experts.