MiFID II call recording is coming: How Smarsh can help you prepare

Adam Woozeer

Like winter, MiFID II is coming. It brings the need for more and better call recording and you need to be prepared.

The Market in Financial Instruments Directive II, to give it its full name, will come into effect on 3 January 2018.

Many aspects of MiFID II are already part of regulators’ frameworks in countries like the UK and Norway. The UK’s Financial Conduct Authority (FCA) views the more novel parts of the directive as good regulatory practice.

In essence, this EU directive is designed to increase transparency in investment banking, better protect retail investors and further integrate the EU’s financial markets, so it is necessarily complex and will entail a hefty pile of paperwork for financial institutions.

The need for call recording

It will generate new requirements concerning the recording, storing and monitoring of telephone conversations and electronic communications. A wider base of staff must be recorded — including IFAs and some support as well as customer-facing employees. And recordings must be stored for longer.

The requirements themselves aren’t wholly new; the UK FCA already asks that individuals directly involved in equity trading have their calls recorded. But MiFID II goes further and demands that anyone involved in giving financial advice that leads to – or may lead to – a transaction must record their conversations and securely store these communications for at least five years.

And with only 10 percent of financial advisers admitting that they currently record telephone conversations and electronic communications in line with MIFID, according to a recent survey by the FCA , the workload on compliance can only go one way.

Money, money, money

Since 2009, the cost of banking compliance has ballooned: According to the Financial Times  JPMorgan added 4,000 employees to their compliance team in 2013, and spent a further $1 billion on controls, Citigroup increased their spending on compliance by $2 billion during 2014/15, and HSBC expanded their compliance team from 2,000 to 7,000 staff over the five years to 2015.

MIFID II adds a further burden on operations already “fatigued”, according to Thomson Reuters’ Annual Cost of Compliance survey.

Necessity is the mother of invention

MiFID II is an ideal time to re-evaluate processes, organisation and technology against business goals — not least given the significant costs now being sunk into compliance.

This doesn’t have to mean a grass-roots overhaul of your entire systems. But it is paramount that any additional investment demanded by the likes of MiFID — be it mobile recording or expansion to other communications channels, for example — is aligned to where you want to take the business, not to what you have today.

Sound fanciful? It’s not. The widespread adoption of web services (as the standard method of application integration) and cloud services (for on-demand deployment) enables firms to develop solution architectures in a far more evolutionary and dynamic way than was the case just five years ago.

And of course, business goals should not be limited to departmental goals. These same technology trends have spawned an explosion in innovative applications that are, finally, making the business-productivity promises of technologies like speech analytics a reality for all organisations, not just the largest. Not only can these transform the effectiveness and efficiencies of compliance, but can drive tangible productivity gains elsewhere in the business.

A compliance solution that can help field sales teams automatically post conversations in a readable form to a CRM system, and measure customer satisfaction through sentiment, has an ROI — and staff acceptance — far in excess of compliance cost reduction.

The Smarsh call-recording solution

In short, you need a communication recording and monitoring platform that makes compliance with MiFID II easy, one that’s flexible, easy to implement and that scales with your needs. Smarsh offers everything that financial institutions are looking for in a recording platform.

Smarsh is:

  1. Compliant. Smarsh enables institutions of any size to meet the communications compliance requirements of current and future regulation.
  1. Affordable. Being up in the cloud, there are no high up-front capital and support costs, just a flexible, reasonable platform that scales with you.
  1. Simple to implement. As a cloud-based platform, Smarsh replaces the complex rollout of on-premise systems with an on-demand service that’s adaptable to your needs.
  1. Compatible. Smarsh can operate as a standalone service, or in concert with existing trade-surveillance and compliance systems.
  1. Responsible. Smarsh works alongside your mobile device management system to respect the boundary between private and professional communications.
  1. Universal. Being able to accurately reconstruct transactions across multiple channels is an essential part of MiFID II.Smarsh can record conversations in real time across mobile voice, landline, voicemail, SMS, MMS, VOIP, email, and social media, and it allows for the quick analysis of both voice and text using built-in speech analytics and search tools, simplifying the disclosure of records.
  1. Like a Swiss Army Knife. Smarsh provides all the tools you need in one neat platform. You can record, archive, analyse and securely share your communications, all from one place.

But Smarsh is not just about satisfying the latest regulatory regime. The benefits of communications recording go beyond mere compliance.

The benefits of recording calls

Those pioneering firms that choose to get their communications infrastructure in line with MiFID II now, using platforms like the Archiving Platform, can reduce business risk, improve customer service and open up new business opportunities by realising the value of their conversation.

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