The technological implications of MiFID II impact everything from a firm’s infrastructure to their recording requirements and customer reporting methods. In early 2016, the EU Commission announced that the deadline for MiFID II, originally set for January 2017, has been postponed by a year to January 2018. Despite the year postponement, there are still several steps firms must take in order to ensure that their technological infrastructure complies with the new standards.
Call Recording and Data Retention Requirements
One of the largest areas of focus for MiFID II is call recording and data retention requirements. In addition to storing the data, firms must also find ways to report quickly on these transactions against multiple file types. Digitalizing all of the data presented in multiple file types will be one of the most challenging obstacles for firms. Despite the fact that the compliance deadlines have been postponed, firms should still operate against the original timeline due to the sheer volume of work associated with storing and recording this information.
Five Steps to Get Started
For firms that are just beginning to evaluate where they stand with the new regulations, we suggest they undertake a simple five step process. To start, firms should first understand the actual scope of work that must be done in order to meet requirements. Once this has been achieved, they should then identify their data retention requirements and the weak links in their current communications infrastructure, decide how they will store and retrieve the data, and finally, if necessary, select a trusted partner to help identify and amend any compliance gaps.
Not Just a Compliance Exercise
While many may view MiFID II simply as a cumbersome compliance exercise and another way for the government to add layers of regulatory control to the market, there are actually several strategic implications. The regulation could actually provide increased market opportunities for firms that adhere to the standards and get their infrastructure in line correctly from the start. Firms that do not comply will ultimately lose revenue, both in the form of fines and investor security.
