Off the Record: How IT Leaders Can Contribute to MiFID II Compliance (and a Big Data Coup)

MiFID II, the new set of rules devised to improve trade and transparency in the European financial markets, is now effective. But some IT and compliance leaders are still in search of clarity how to implement the changes required. What implications does the Directive have for the IT Department, and how can IT Directors contribute to meeting compliance standards?  

Since 3rd January, financial service providers are legally required to capture, retain and, upon request by the Financial Conduct Authority, reconstruct all communications between buyers, sellers and investment intermediaries. However, research conducted by Censuswide and Red Box Recorders has thrown up questions how much clarity there is on the Directive’s communications recording requirement amongst IT decision-makers and senior compliance managers. 

Almost all firms dealing in or processing financial instruments across Europe are now responsible for building a clear audit trail of their investment decisions, transactions and client conversations. An important element in achieving transparency is the stringent recording and storage of all telephone conversations and electronic communications to provide accurate evidence of what was said (or not said) during conversations between buyers, sellers and agents.

The Bit the FCA Forgot to Tell

That's easier said than done. In a first step, it requires financial service providers to comprehensively review their business processes to identify all possible client and transaction touch points. In a second step, firms must implement and maintain a (or upgrade their existing) call and data recording solution to ensure compliance across all communication channels and devices. Now, that’s a job that will fall to the trusty old IT Department and that is why it is so important that IT heads understand how they are contributing to the compliance puzzle. Luckily, help is close. Together with specialists such as the team over at Red Box Recorders we help IT leaders plan, implement and manage compliance call recording solutions.


 Related: What IT Directors Need to Know about MiFID II and Call Recording


The survey of 100 ITDMs and compliance officers in the UK finance sector showed that 73% of respondents admitted they weren’t completely ready for the new legislation just weeks ahead of its enforcement. The extent of operational change that MiFID II calls for may have caught some out while the confusion of how a British exit from the EU could affect the enforcement of the Directive may have lured others into the realm of corporate inertia, though industry commentators are foreseeing the tough enforcement of the new framework in the interest of international trade.

Call Recording Rules

At least, technology and infrastructure investments for compliance have moved firmly onto this year’s agenda for over half of the senior professionals surveyed. To help financial services firms catch up with the new recording regime, our partner, Red Box Recorders has launched a White Paper detailing the call recording rules and how they can be met.

As suggested in our previous post, when we were getting our customers ready for MiFID II, key factors to consider upon reviewing your recording solution include recording quality, data retention capacity, event reconstruction capability and resilience. 

For all the compliance complications, it is worth remembering that this legally enforced data capture requirement can indeed be turned into a Big Data opportunity. For the wise, this may well be the start of a digital transformation process that could improve business processes, services and customer satisfaction.

Think About It

After all, communications data is a valuable currency that can be used to understand more about your customers. As the data is collected across all communication channels and analysed in depth for business intelligence, it can provide a comprehensive view of all client conversations, uncovering common pain points, praise, requests and complaints that offer insight into the way customers wish to do business with you. It may spur insight into the kind of service improvements they are hoping for. Or shine some light on possible new client services (and revenue lines for your firm) that you had not thought of before. Think about it - MiFID II presents an opportunity for more than just compliance.

Now, who will nab the brownie points for putting that call recording solution into place?

If you would like to find out more about how you can record and analyse client communications for MiFID II compliance and data insight, download “MiFID II Compliant Call Recording: Fast Facts for IT Directors”.