MiFID II in a nutshell: new communication regulations

By January 2018, senior managers and IT specialists of any businesses involved in the trading of financial instruments need to comply with MiFID II.

This blog has been written to give you a summary of one of the most important aspects of MiFID II in a nutshell: the implications for the security of business communications.

By Suzanne Whetton

MiFID II overview

MiFID II stands for the second ‘Markets in Financial Instruments Directive.’ This updated directive and the associated regulation, MiFIR, exist to promote transparency and safety in the financial markets. Specific rules are in place to govern finance businesses’ communications with business clients in both the retail and service sectors.

The framework of MiFID II is complex. Its implementation will have far reaching consequences for all kinds of processes and policies within a finance business. Businesses that are not compliant come January 2018 are at risk of fines of up to €5 million or 10% of global turnover.

Thankfully, ensuring the security and accountability of all communications - an important part of MiFID II - is one part of the regulation that businesses can comply with readily.

Communications in MiFID II explained

MiFID II stipulates that all communications that relate to transactions must be recorded. One jargon-heavy section of the directive states:

“Records shall include the recording of telephone conversations or electronic communications relating to transactions concluded when dealing on own account and the provision of client order services that relate to the reception, transmission and execution of client orders.”

In plain English, this means that all transactional communications - whether they occur over the phone, via SMS or via email - must be recorded.

Another key section says: “An investment firm shall take all reasonable steps to record relevant telephone conversations and electronic communications, made with, sent from or received by equipment provided by the investment firm to an employee or contractor or the use of which by an employee or contractor has been accepted or permitted by the investment firm.” 

This section is saying that communications on any device that has been provided by the company or approved by the company must be recorded. For example, if an employee’s personal smartphone has been approved for business use, transactional calls must still be recorded.

Needless to say, this presents a problem for finance businesses. Adding a call recorder to a landline might be a simple job, but how many businesses use just one landline anymore?

One solution is adding tracking devices and software to every individual device. This is possible (in theory), but not practical. We have a better idea.

Preparing for MiFID II implementation

Implementing unified communications in preparation for MiFID II covers all of your bases. With UC (or UCaaS - unified communications as a service) all of your communications are hosted through one platform. In our case, this platform is Skype for Business.

 UC brings all electronic communications, including phone calls on landline and mobile, emails and instant messaging, under one umbrella. Our UC solution is cloud-based, which means it doesn’t require complex hardware installation either.

 Good UC software will be able to track and record all communications through integrated devices, which means businesses don’t need to be concerned with how to record relevant calls from employees’ mobiles. Just install the app on the device and you’re good to go.

 It’s important to note that, during the process of moving to a UC solution, you should conduct a current communications review. You need to know what devices are being used for business purposes to make sure that UC covers all your employees.

 In addition, implementing UC does not guarantee MiFID II compliance. In order to ensure full compliance at all times, your business’s communications policy needs to be updated. Employees have to understand that, if they want to use a personal device for business purposes, it needs to be integrated with the company’s UC software. Employees also need to get into the habit of using this software whenever they conduct transactional communications on any device.

Preparing for January

Many business owners and IT specialists will undoubtedly have questions about MiFID II, even at this late stage. While answering all of them is beyond the scope of this post, we can say with confidence that UC or a similar solution is a very practical response to a key part of the directive. With communication tracking and recording handled, you’re free to focus on the more complex requirements.

VIA’s Solution

We offer a complete MiFID II compliant Unified Communications and trade product. For more infomration please visit the below webpages or ring us to talk to one of our experts.


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