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MiFID and what it means for communications

/ Legal / 2 min read
Brring + MiFID

MiFID I

Introduced in 2007 MiFID (Markets in Financial Instruments Directive) brought sweeping changes to the way in which financial transactions and the communications surrounding each transaction had to be kept. Intended to protect investors and increase competition these new requirements were enforced on (but not limited to) email, chat and telephony.

Applying to any firm providing investment services and activities firms are obligated to ensure records are kept on the following:

  • Transactions in financial instruments carried out on behalf of clients
  • Transactions in financial instruments executed on behalf of the firm

Records have to contain the information and details of the transaction as well as the identify of the client. The period for which records have to be kept is a minimum of five years.

Furthermore records are required to be readily available to the local NCA (national competent authority) upon request in a way which allows straightforward traceability of the entire transaction process, with any alternations in the record identifiable and the final state of the record intended to be completely unalterable.

In the UK the local NCA would be the Financial Conduct Authority (FCA) – a complete list of NCAs can be found here.

MiFID II & MiFIR

Due to the global financial crisis and currency scandals an enhanced set of rules were tabled by the EU in 2014 giving birth to MiFID II which was introduced into law in 2018. It replaced MiFID I with a more stringent and broader set of regulations.

Unlike MiFID I, MiFID II mandates record keeping of telephone conversations, recordings and emails and electronic communications whenever a firm executes an order for either itself or on behalf of a client, irrespective of whether the transaction is actually executed.

As a result all client related phone calls and emails where transactions are intended must be captured and held for five years.

Furthermore firms are required to inform clients that their communications are to be recorded at least once. When enabling call recording Brring plays a notice to inform your contacts the very first time their call is recorded and allows you to enable call recording across your entire team.

Communication records are expected to be available to clients on request, stored for five years and if requested by the competent authority or NCA must be held for an additional two years on top of the five years already expected. Brring allows flagging of NCA requested records and applies a longer expiry time to them.

As part of the new requirements firms are expected to monitor their compliance regularly and to ensure records are incapable of being tampered or amended and easily accessible. In Brring every call and SMS sent is tracked and timestamped to the second and securely archived. All records can be easily retrieved using our intuitive interface and APIs.

With call recording costs estimated to add up to £1200 per year to the average mobile phone bill the need for cost effective compliance has never been greater. We built Brring with compliance as standard, get in touch with us to discuss your call and compliance needs.

Sources:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32004L0039
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0065
https://en.wikipedia.org/wiki/Markets_in_Financial_Instruments_Directive_2004
https://www.fca.org.uk/markets/mifid-ii
https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A32014R0600