Markets in Financial Instruments Directive - MiFID II

The Financial Services industry in Europe is facing the biggest changes in regulatory legislation for over a decade. Driven in part by widespread consumer mistrust, the recasting of the Markets in Financial Instruments Directive, known as MiFID II and the accompanying Regulation, MiFID II, will put into place far-reaching new rules, which aim to strengthen investor protection, prevent market abuse, increase transparency and re-establish consumer trust. Even though the United Kingdom (UK) has voted to leave the EU, it is likely that compliance with MiFID II will continue to be a regulatory requirement and the Financial Conduct Authority (FCA) views the directive as good regulatory practice. MiFID II will come into effect on 3 January 2018.

The Need for Call Recording

Some of the most controversial aspects of the new regulations relate to the use of communications recording - both in terms of the scope of communications that must be recorded and the requirement for firms to monitor recordings in order to remain compliant. Whilst the FCA has required for some time that firms and individuals directly involved in equity trading have their calls recorded, MiFID II goes much further and requires that anyone involved in giving financial advice that may lead to a transaction must record their conversations and securely store these communications for at least five years.

Types of Businesses affected by MiFID II Call Recording Requirements

MiFID II affects a range of firms that provide or advise on financial instruments or services. The type of businesses that will need to comply includes:

  • Finance Companies
  • Credit Institutions
  • Stock Brokers
  • Broker Dealers
  • Investment firms
  • Financial Advisors
  • Portfolio Managers
  • Central Counterparty Clearing Houses
  • Corporate finance companies
  • Regulated Market Operators

The FCA has agreed that Retail Financial Advisors can meet the requirements by either recording calls or alternatively taking written notes of relevant conversations. However if opting for note taking the notes must meet the ‘analogous’ requirement under MiFID II and must be detailed, substantive and ideally the notes made of relevant phone conversations should be shared with clients on a regular basis in order to ensure their accuracy.

Some RFA firms may decide that it is simply easier and safer and cost effective to record their calls. Firms that already record telephone calls should consider whether their current call recording system has adequate storage and archiving capabilities to meet extended storage requirements and that the search capabilities will be compliant with both MiFID II and GDPR regulations.

Businesses that are covered by MiFID II, but have no call recording in place should put in place a recording solution by January 2018.

Storacall have over 45 years’ experience in helping companies meet compliance requirements, we provide cost effective call recording solutions to help you ensure suitable records are kept along with keeping a full audit trail. Combine this with our agent evaluation and training solutions allowing you to regularly monitor agents and provide consistent training of your staff. Storacall will provide you with a robust solution to help you meet MiFID II compliance and our specialists will be happy to discuss the challenges you face along with the solutions and choices involved.