MIFID2/MIFIR and Comms Recording

With MIFID II (Art. 16, no. 6 and 7), EU investment firms became obliged to produce and store records of all communications related to the orders/transactions.

In more specific terms, investment firms became obliged to:

• Keep records of all communications related to transactions and intended transactions (for own account or client accounts), including telephone conversations, electronic communications and face-to-face conversations (such may be recorded through written minutes/notes);
• Notify clients (in advance, and at least once) that communications that result or may result in transactions will be recorded;
• Provide these records to the respective clients upon request;
• Keep these records for a period of 5 years, and, where requested by the CA, for a period of up to 7 years.

Recording and storing (in an organized way) all communications (voice, video, text, email, social media, face-to-face, etc) held with clients can be quite costly, as it requires new infrastructure, new software and extra man-hours. In addition, there are also potential fines for the IFs that fail to properly comply with the new rules that can go up to 5 M€ or 10% of the annual revenues.

The need to deal with such requirements created the opportunity for both already-established and new solution providers to create new communication recording tools.

Note: MIFID I did not require IFs to record order/transaction-related communications. However, it gave leeway for Member States to impose such requirements (namely through MIFID I Implementing Directive 2006/73/EC) - and some actually applied such gold plating, as the UK for example. This means that the degree of change imposed by MIFID II varied from country to country.