MiFID II Record Keeping
In order to comply with new MiFID II record keeping requirements, firms are now required to retain additional information on services, activities and transactions.
What’s required for MiFID II record keeping?
While MiFID I offered some flexibility on record keeping, MiFID II is far more stringent. MiFID II’s record keeping requirements state that all communications that relate to the “reception, transmission and execution of client orders” need to be recorded.
Under MiFID II, it is mandatory for firms to record all telephone calls and electronic communications that might result in a transaction – regardless of whether the transaction is actually completed.
As of January 2018, firms are required to:
- Inform new and existing clients that communications that may result in transaction will be recorded
- Keep records of telephone calls or electronic communications that relate to transactions on both personal accounts and client accounts
- Make every effort to ensure conversations around transactions are conducted in a “durable” medium
- Take all reasonable steps to prevent employees from discussing transactions via their own personal equipment (ie. equipment that is not being recorded by the firm)
For face-to-face conversations, minutes or notes should be used to record them. According to ESMA, firms will need to keep records on:
- The date and location of the meeting
- The identities of the people in attendance
- Relevant information on the transaction (or proposed transaction)
MiFID II deems these conversations to be equivalent to orders received by telephone.
Time limits on MiFID II record keeping
All communications regarding transactions will need to be stored for a minimum of five years – a substantial increase from the current period of six months. If requested by an NCA (National Competent Authority), the communications may need to be kept for up to seven years. Records should be made available to clients on request.
The records must be easily retrievable and fully monitored, for access and reporting to relevant regulators in the industry standard 72-hour time frame.
A crucial part of the MiFID II record keeping requirements is that the records cannot be manipulated or altered. Since the data relating to trade and communications is so sensitive, it must be stored in WORM (write once, read many) format, which is considered to be fully tamper-proof.
Records that must now be kept include:
- Trades, whether scheduled or completed
- Communication, including phone calls, faxes, messages, emails or physical mail
- Documentation, including research, minutes of meetings, sales or marketing communications
Meet MiFID II record keeping requirements with eflow
With the eflow product, all data storage fully conforms to the standards of WORM, meaning that sensitive information is fully secure for your firm and your clients.
Search and retrieval is flexible and instant, and it’s easy to extract information, so you can keep to the strict regulatory time frames set out in MiFID II. All data is written to disk, and storage is digital and completely immutable.