With the imminent implementation of the new Markets in Financial Instruments Directives II (MiFID II) many financial institutes across Europe are finding themselves faced with a complex set of regulations that will leave them falling short of compliance. In a recent think tank event held in London more than a dozen firms who participated in a survey showed only a small percentage of them confirming they would meet compliance with MiFID II mandates which are focused on best execution, reporting, record-keeping and prevention of market abuse.
As MiFID II implementation looms some of the key challenges for regulated companies include:
- Record-keeping for MAD/MAR and MIFIR
- Demonstration of ‘best execution’ to both clients and regulators, together with published information on top execution venues and quality of execution.
- Transaction reporting – which demands the provision of a complete record of all services, activities and transactions in a form that is readily accessible to regulators.
- Mandatory recording of phone conversations and the retention of e-communications relating to all transactions – with records being kept for a minimum of 5 years. In addition these records must be stored in tamper-proof format and be available on demand.
- Trade archiving – all algorithmic trading records need to be stored in tamper-proof format – whether the trade was executed or not, and must be kept for 5 years.
Whilst MiFID II is designed to improve the archiving, accessing and retrieving of the growing volume of data around financial transactions, it is clear that as the volume of this digital data increases so too will the regulatory demands from MiFID II that coincide.
MiFID II Milestones from the Financial Conduct Authority