If you have ever worked in the financial industry in the EU, you are likely familiar with the Markets in Financial Instruments Directive, or MiFID II. This is a series of regulatory reforms initiated in 2018. (Financial sector regulations vary but are just about everywhere.)
These reforms are meaty. And I mean MEATY. The legislation includes 1.4 million paragraphs of rules with the intent to standardize financial practices across the industry.
While standardizing practices are extremely beneficial to the collective whole, the new onslaught of rules and regulations can put some businesses in tricky situations, with hefty non-compliance fines serving as a goad for adherence.
Managing information to meet this level of compliance requires a high level of capabilities to understand what information is under management, then to apply the required restrictions on how that information is kept.
Proactive businesses, however, will take steps to ensure they are in the right position to act on regulations targeting record keeping, supervision, and transparency of trade data.
The right technology partner to help prepare for the new regulations will offer significant and comprehensive expertise in enterprise software capable of meeting complex regulatory compliance requirements.
With all this in mind, to maintain regulatory compliance, do financial feeds need to be archived? (Spoiler… yes.) And, if so, how will archiving financial feeds help observe regulations?
MiFID II introduced new measures requiring a standardization of record-keeping for enforcement. It also considers new types of records that have emerged in business communication over the prior decade.
Firms must capture regulated communication records, unaltered, across all “client approved” communication and collaboration channels, including documentation of face-to-face meetings.
MiFID II Requires:
- The capture of regulated communication records
- Everything is recorded in UTC format
- Accurate timestamping to the second or millisecond
- Times must be synched to the atomic clock
How to Comply:
A complete compliance archive and risk management platform is designed to collect, enrich, and manage communication data required by the regulations. You need to be able to collect the full range of record types such as email, voice, social media, chat, and social collaboration sites.
Regulators need an audit trail to track the messages from receipt to storage and indexing. They then require the ability to export in bulk and in numerous data formats for the competent authority requests.
Retain and Store
The first step in comprehensive, accurate retention is knowing what data you are capturing, and then having the ability to prove where the data is being stored.
Further, to comply with MiFID II, an organization must maintain the data it collects on a durable medium.
MiFID II Requires:
- Durable medium for storage
- Data retained for 5 years, 7 upon regulator request
How to Comply:
A rigorous compliance archive can securely archive all business communication on non-changeable and encrypted media. Being able to consolidate all your data into one central store allows for fast recall when needed, eliminating the need for multiple searches, and allowing for important data to be stored for the required length of time.
Firms are now faced with the requirement to establish and execute supervisory policies and procedures to capture, maintain, and reproduce all records of activities (including voice data and metadata) for firm and client accounts.
The intention of the regulation is to help business prove they are acting honestly, fairly, and professionally.
MiFID II Requires:
Supervisory policies for:
- Voice data
- Social media
How to Comply:
Unlike a simple hard drive, a compliance archive offers data enrichment capabilities that work with voice and image text and can perform eduction and sentiment analysis.
You will need a platform that makes all forms of required communication available for supervision, in addition to transcribing images and performing voice-to-text transcription. The ability to enforce policies around image and voice text is extremely beneficial in maintaining regulatory compliance.
Organizations must be able to show a regulator within a short time frame the entire history of a trade. A request may ask for data such as the pre-trade email, pre-trade phone call, trade data, and post trade reports. Because each of these items may be generated within a different repository, organizations must have a process that allows the data to be gathered quickly, through as few places as possible to retrieve it.
MiFID II Requires
- Review trade data and all associated communications
- Include pre- and post-trade activities
- Include trades not completed
- Use multiple tools to present data
- Present information in time and date UTC order
How to Comply
Being able to universally search your structured and unstructured data is paramount in remaining in compliance. A platform that provides reports can help ensure your processes are within compliance standards and can illuminate inconsistencies.
Since all business communication is rarely done on a single channel, you need to be able to search in multiple places on one platform. This allows you to fetch an entire conversational transaction and present it in context either for business insight or upon regulator requests.
Whether you like it or not, rules and regulations, particularly in the financial industries, are here to stay. Compliance it is.
To maintain regulatory compliance and keep your business afloat, you will need some way to manage, store, and analyze your data.
A compliance archiving solution that covers all the capabilities discussed will not only keep your business on good terms with regulating bodies but will allow you to do more with your data.
The abilities to retain, store, supervise, and make visible your key business communication will let help you comply and thrive in a world of escalating regulations.
For more on information archiving, take a look at our site.
Be sure to contact us if you would like to know more or see how compliance archiving can help your business.
Have technical questions about Information Management products? We have discussion forums for every IM&G product.
Do you have an Idea or Product Enhancement Request about IM&G products? Submit it in Idea Exchange.
We’d love to hear your thoughts on this blog. Comment below.
The Micro Focus IM&G team
Know your data | empower your people | drive your future