Complying with MiFID II without compromising productivity

Published On : 03/28/2018

Florian Bienvenu, SVP, EMEA, BlackBerry

The financial services sector is one of the most heavily regulated industries due to the sheer volume of transactions. Customers trust financial firms with their details, so to protect the highly-sensitive information organisations must adhere to security and compliance standards. However, this can be challenging for employees as the processes can interfere with day-to-day operations.

Florian Bienvenu

The Markets in Financial Instruments Directive II (MiFID II) will come into effect in the EU on 3^rd January 2018 and is yet another regulation financial firms will have to prepare for. For many investment firms, this will be the first experience of such in-depth regulatory intervention, and the Financial Conduct Authority (FCA) recently warned brokers that MiFID II could be extended to sales and trading roles. The goal of MiFID II is to make European financial markets more resilient, transparent and investor-friendly. In order to achieve this, organisations must keep records of all services, activities and transactions undertaken for a minimum of five years, including all telephone calls, text messages, instant messages and social media interactions. It is also essential that all the records are discoverable, especially when conducted on a mobile device.

MiFID II, although an EU directive, is not limited to firms based in the EU. It has many cross-border implications and will require organisations that trade or have dealings within the EU to comply. Although the U.S. Securities and Exchange Commission (SEC) has stated it would grant Wall Street a 30-month grace period for compliance, it has caused a global need for preparation ahead of the 3^rd January 2018 deadline.

Due to the scope and complexity of the regulation, firms are concerned that it will put a strain on productivity because of the new processes that are required in order to be compliant.

Organisations are also aware that the project will require additional resources – the number of job adverts on LinkedIn for MiFID-related roles has more than quadrupled in the last year as companies prepare for the regulation. As well as relying heavily on expert knowledge, it doesn’t just concern the legal team but also operations and IT. In addition, the IT team need to ensure that they are adequately skilled to coordinate and manage the project, while also being mindful that the MiFID II implementation can run alongside other projects.

MiFID II will also command traders to adhere to the transparency and reporting aspect of the regulation. Alongside this, data collection and discovery is also must. However, putting it all into practice can go beyond the capacity of many firms. In order to adhere to the regulation, organisations should embrace a mobile compliance technology that will allow them to capture conversations on all endpoints, including smartphones, tablets and wearables – ultimately protecting the organisation from hefty fines.

A communication capturing solution can also remove the need to take detailed notes. This will not only save a lot of paperwork, but will eliminate uncertainty over who said, and agreed to what, allowing traders to concentrate on what they do best – closing deals, rather than worrying about whether they’re recording conversations accurately.

The recording function of a mobile compliance tool provides a perfect balance between the customer experience and compliance. If or when an employee leaves an organisation, the handover process will be seamless – allowing the new recruit to simply listen to the most up-to-date audio records and pick up from their predecessor, eradicating any potential concerns regarding previous deals or verbal agreements the customer may have had.

In addition to improving the customer experience, mobile compliance platforms offer the opportunity to improve the quality of service employees provide their clients. Analysis of telephone conversations allow the team to improve the way they interact with their clients. Internally, line managers can use the recordings during training and development sessions; coaching team members on best practices, or on how they can upsell on other services within the business.

According to JWG, 90% of buy-side firms are at risk of non-compliance by the MiFID II deadline. If firms proactively prepare for MiFID II early, it will allow employees and the IT team to test the technology first. Preparing early not only ensures the organisation is compliant before the deadline, but it prevents any potential disturbances to productivity when MiFID II does come into effect.

Organisations should also recognise that being MiFID II ready before the 3^rd January 2018 deadline provides a competitive edge as it highlights proactivity and demonstrates that the firm is leading the way in best practice.

While MiFID II will require changes within the business, it should not be seen simply as an additional cost. Businesses should recognise the opportunities it offers – enabling increased resilience productivity and efficiency, and more importantly increased protection of the security of the business.

Wanda Rich

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.