Keeping up to date with regulations can be challenging, especially in complex industries like the financial sector. 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, plus specific requirements on how phone calls should be made, recorded and stored.
Here we explain how you can work to ensure that your company complies with the MiFID regulations’ telephony requirements, and how to simplify the process.
About MiFID:
MiFID II, which entered into force in 2018, is a major upgrade from MiFID I. It is designed to address weaknesses in financial markets and keep pace with new technologies. The regulations cover many aspects of investment services, such as trading and how information is handled. The idea is to increase transparency, protect investors and keep the market fair.
MiFID III (due in 2025/2026) goes further and includes retail clients, among others.
Areas affected:
- Investor protection: Ensure that investors are protected so that they are not exploited or exposed to unnecessary risks.
- Transparency: MiFID II aims to increase transparency in financial markets by introducing requirements for the publication of trading data, the use of trading venues and the reporting of transactions to regulators.
- Market integrity: MiFID II includes measures to prevent market abuse and improve the integrity of financial markets. This includes stricter rules for monitoring and reporting suspicious transactions, improved oversight of algorithmic trading and the introduction of position limits for commodity derivatives.
MiFID II and telephony
MiFID II requires the recording of all telephone and electronic communications related to activities aimed at completing transactions or providing client order services, even if they do not lead to actual transactions. This includes mobile calls, which emphasizes the need for a comprehensive recording regime.
There are three primary reasons behind this recording requirement:
- Dispute resolution: Recorded evidence helps resolve disputes between businesses and customers.
- Enforcement of codes of conduct: Regulatory bodies within companies benefit from recorded communications to ensure compliance with codes of conduct.
- Prevention: Recordings improve detection capabilities, act as a deterrent against market abuse.
In accordance with MiFID II, investment firms are required to take reasonable steps to record relevant communications on equipment provided by the firm. This obligation extends to preventing employees from using personal, non-recordable devices for such communications.
Importantly, the Directive’s emphasis on mobile phone recording is not new; it dates back to 2010. Although the cost of recording mobile phones has decreased, MiFID II maintains the requirement.
To protect themselves, companies are advised to provide cell phones to affected employees, ensuring control, oversight and policy compliance. The comprehensive nature of the Directive requires the recording of all relevant communications, emphasizing a holistic approach to compliance.
MiFID regulations also impose specific requirements on how telephone calls should be recorded and how these recordings should be stored. For example:
- Record all calls that may result in transactions.
- Inform customers that the call is being recorded.
- Store all recordings for at least five years.
- Quickly and easily retrieve all communications related to a specific transaction or during a given time.
There are also technical requirements on how the systems should be configured, requiring recordings to be started automatically rather than relying on manual activation and specifying the time allowed for data transmission and retrieval.
How you can simplify the MiFID compliance process:
All these regulations can be overwhelming, but it is possible to simplify and streamline the process. We recommend using a solution with built-in call recording to avoid any delays or manual processes. In addition, dedicated compliance platforms can be used to ensure that these recordings are transmitted and stored correctly.
The most effective way to ensure compliance is to use integrated systems instead of trying to manage several different platforms that do not communicate
with each other.
Telavox MiFID package
The Telavox MiFID package is designed to meet the requirements of banks, financial advisors, stockbrokers, traders, hedge funds and insurance companies. Specifically, it simplifies the management of recordings, enables early reporting and establishes a robust data system.
Built-in recording and integrated storage
With Telavox’s call recording feature, you can record calls automatically, simplifying your tech stack. These recordings can be integrated directly with Touch’s archiving platform, making your compliance process that much easier.
Tracks and past data:
A key aspect of MiFID that many firms struggle with is accessing past communications. Telavox integration means you can easily access past data for dispute resolution, trails, inspections, documentation, monitoring and notifications.
How can Telavox help with MiFID compliance?
- Seamless, automatic built-in call recording for relevant communications.
- Comprehensive compliance management with our partner Touch Call Recording, which specializes in archiving and monitoring, will ensure continuous compliance with MiFID regulations.
- Secure and streamlined integration of BankID before or during phone calls to ensure two-factor authentication (2FA), improving identity verification in financial transactions.
- Future-proof solution and an end-to-end solution for archiving and audit logs requirements of your calls.
Summary:
MiFID regulations require firms to understand the role of telephony in customer interactions. Call recording, storage and management requirements can seem complex. By using native call recording and combining this with dedicated storage platforms and identity verification, you have the building blocks for a powerful but simple compliance process.
Please note that the text above is not legal advice but a description of the product offering of Telavox and its partners.
