CITY AM Article: As many businesses are still unprepared for the regulations, it’s clear time is running out
The EU’s MiFID II financial regulations come into force in just four months and around the world financial institutions remain confused and challenged about how to comply.
MiFID – the “Markets in Financial Instruments Directive, Phase II” – introduces a raft of new rules for the finance industry, above all covering trades and transactions.
THE CLOCK IS TICKING
Among the most onerous is a new requirement that all electronic communications and phone calls that possibly relating to financial transactions must be recorded and logged.
They also have to be stored and retrievable with perfect recall.
Capturing emails is one thing, but no International banks or hedge funds I know of are geared up to record all calls. And time is running out.
COMPLACENT ABOUT COMPLIANCE
Recent discussions with friends in very different institutions reminded me again how under-prepared even the biggest firms are.
Many have only recently understood that MiFID II does not just affect businesses in Europe, but firms based anywhere but doing business in the EU.
Any bank anywhere in the world which is trading with an EU partner has to record and store communications to be compliant.
TRYING TO NEGOTIATE THE MINEFIELD
Across the board firms say that capturing mobile phone communications in particular has become a minefield.
The impact of BYOD –“bring your own device” – means that more and more employees now routinely use their personal phones to make unrecorded business calls.
It gets worse.
Some rogue employees are using employer-banned consumer apps like We Chat and WhatsApp for doing business, in full knowledge that voice calls on them cannot be recorded.
Ephemeral messaging apps like Snapchat are even more difficult as they leave no permanent record of what’s been said, by who, or even to whom.
Banning it seems is not enough.
THE BIG BOMBSHELL
When the new regulations come into force on 3 January 2018, a lot of financial institutions may hope that logging and recording fixed line communications will at least give the semblance of compliance, despite knowing that employees using their own Apps could prove to be a compliance bombshell.
As a regulated Broker myself, I witnessed the looming clash between the draconian demands of the new rules and the reality of a world in which people are so attached to the functionality of their smartphones that they can’t be persuaded to use less cool enterprise software.
That awareness shaped the way VENNCOMM developed its mobile platform and App to automatically record and log every business text or call globally while also being reliably compliant.
Banks and hedge funds are now urgently seeking this type of service.
Whatever vendor solution they choose, the banks have woken up to the realities of a world in which business is increasingly done on BYOD mobile devices.
Banning use of unauthorised apps is one vital step. The other is to make use of enterprise apps which let you use your own phone but log and record every business call in compliance with the new rules.
Lee Stonehouse is the Founder and Chief Executive of communications firm VENNCOMM.