It’s been more than a month since the UK voted to leave the European Union (EU). The UK business community continues to be in a state of flux with many large firms warning they will move their headquarters out of the UK if Britain’s negotiations to leave the EU curb freedom of movement.
But with a new Prime Minister in place and the Financial Conduct Authority (FCA) signalling business as usual—at least in terms of existing regulation—is the ship about to steady? In the short term, will anything change as far as regulation is concerned?
The fact remains that until the conclusion of the Article 50 withdrawal agreement, the UK remains a member of the EU. This means EU rules, including MiFID I, still apply. If an agreement is not reached within the two-year period, the treaty on European Union will automatically cease to apply to the UK. The negotiation period could be extended beyond two years, but that seems unlikely given the position of some European leaders in the wake of events.
However, many financial services firms want to know what will become of EU legislation in progress, such as the Markets in Financial Instruments Directive II (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR). Both of these were designed to remove barriers to cross-border financial services and to foster a competitive and level playing field between trading venues in Europe.
Until the UK formally withdraws from the EU, laws such as MiFID I continue to apply. In addition, firms should also continue with the implementation of the forthcoming MiFID II regulations. Also, those firms that have not yet begun preparations for MiFID II should start.
Unless the terms of UK withdrawal from the EU are agreed before 3rd January 2018, UK based financial services firms will be expected to comply with MiFID II and MiFIR. And even after the UK withdrawal from the EU, there’s a distinct possibility the UK will elect to stick with the MiFID II and MiFIR regime. After all, the UK has championed many of the changes implemented within MiFID II, and the FCA has certainly made it clear that European regulation is still a critical issue in the wake of the decision to leave the EU.
Smarsh believes UK businesses ultimately need to address the expanded requirements for recordkeeping under MiFID II. The new MiFID II rules will require businesses to have mechanisms in place to capture, retain, and reproduce electronic communications records related to business services, activities, and transactions on firm and client accounts.
For more information about MiFID II, read our Preparing for MiFID II and MIFIR Recordkeeping. This outlines the MiFID II revised voice and digital communications recordkeeping requirements, and the specific implications that UK firms will face related to the updated legislation.
Preparing for MiFID II and MIFIR Recordkeeping also outlines Smarsh recommended best practices for recordkeeping, including the importance of implementing a comprehensive archive platform. Other practices are revealed that will help a UK firm demonstrate preparedness for MiFID II compliance.
The most likely outcome is that nothing will change regarding MiFID II, especially the recordkeeping and surveillance requirements, since they are the least controversial.
For U.K. financial services firms, it’s arguably the safest and smartest approach to simply take action and start preparing for MiFID II now.
The Smarsh Electronic Communications Compliance Survey Report, now in its sixth year stateside, has become a trusted source for financial services firms worldwide. Offering an insight into trends, concerns and best practices relating to the retention and oversight of electronic communications, the report also highlights the biggest compliance risks.
For the UK market the Smarsh report is the first of its kind exploring both the differences between US and UK financial firms and UK firms’ attitudes to the oversight of electronic communications.
In 2015, our first insight into the UK market, highlighted fundamental cultural and regulatory disparities between the UK and the US. It also revealed US firms were streets ahead of UK firms at grasping the importance of having robust data retention and oversight strategies in place. We will shortly be closing our 2016 UK survey, so if you haven’t shared your views, we would welcome them. Please do participate here — 2016 UK Electronic Communications Compliance Survey
We expect to publish our findings in early July. Meantime, to whet your appetite, here are some highlights from our US study…
- Firms urgently need to rethink their current approach to retention and oversight of electronic communications.
- 50% of respondents cited social media as the communication channel representing the biggest risk.
- 40% of firms surveyed believe too many or way too many messages are flagged for their review.
- Nine in ten respondents expect resources devoted to electronic message compliance will remain the same or increase only slightly in the next 12 months.
And if you’re interested in viewing the full US report, it’s here: Smarsh 2016 Electronic Communications Compliance Survey Report
It’s no secret that email and social media archiving can be used to ease the compliance headache of meeting regulatory, privacy and e-discovery requirements. But the real potential value it affords remains largely undiscovered.
As social and digital channels and content types become more sophisticated and widely adopted, it is apparent they can also be used to enhance productivity and create opportunity. Comprehensive, automated archiving solutions that capture, supervise and retain electronic communications in a search-ready state, can also offer firms considerable benefits beyond compliance.
Smarsh has identified four key benefits of archiving we believe can add significant business advantage:
1. Understanding the Impact of Communications
Having a clear picture of what firms are doing well can reinforce strengths and successes. To discover new synergies and insights, businesses need to be able to “listen as an organisation.” All firms, for example, should be able to analyse and track how quickly and effectively their sales and services teams reply to customer communications and what language is most effective.
2. Managing Risk
The holistic oversight enabled by comprehensive archiving solutions can reduce the risk of “dark corners” in firms. In other words, those environments where remote teams, third party suppliers, or unmonitored social media accounts could wreak havoc with corporate reputation, business outcomes, or service delivery.
For example, an effective archiving solution with policy-driven supervision functionality can identify rogue employees, dissatisfied customers, and potentially negative incidents before irreversible damage occurs. Both customer and employee mentions of competitor brand names, products, and services can be tagged and analysed for any concerning trends, ultimately enhancing competitive intelligence efforts.
3. Quantifying and Analysing Unstructured Data
Many archiving services can track the basic metrics of communications efforts. Nowadays it is fairly straightforward to compile likes, shares, follows, and mentions on social media platforms. But most social media activity produces unstructured data and communication (text, pictures, photos, videos) that won’t fit neatly into a relational database. This data is much more powerful and meaningful when retained in its native format and proper context enabling rich and granular search later on. Automating the collection and indexing of this data means businesses can measure things like product and service quality, or the quality of leads and relationships created by social media efforts.
4. Future Proofing
By casting a wide enough net and storing the captured data in a secure, reliable and search-ready fashion, firms can keep their proverbial finger on the pulse of customer sentiment, market trends, and emerging challenges. They can also document successes and build on them in timely fashion.
By actively seeking to understand the nuances of the market through the lens of communications, businesses will be able to respond much quicker to unexpected developments. Not only does this allow the collection and scrutiny of data to solve today’s challenges, it also enables advisers to future-proof their business.
Comprehensive, automated archiving is a powerful strategic tool. Businesses are best placed to use it to drive business growth and gain advantage over competitors who don’t have the tools to mine and leverage their data gold dwelling within unstructured communications data.
Read the recent Osterman Research report Next-Generation Archiving: Extracting Intelligence from your Electronic Archives to learn how to get more from your message archives.
Smarsh has been active in the UK market for almost two years now and the validation for choosing London, the financial services epicenter, as our first European location was affirmed last week. As gold sponsor of Infoline’s Marketing and Compliance 2016, we heard first-hand how firms are struggling to contend with multiple channels across multiple mediums against a backdrop of multiple regulations.
This year’s event had a packed agenda with panel discussions and speeches from leading marketing and compliance professionals across financial services. Overall, it was clear that businesses still have some way to go to;
- Overcome any persistent fear of social media.
- Improve their understanding of the impact of new regulations.
- Ensure compliance and marketing teams continue to improve collaboration.
For example, following our presentation: navigating the expanding compliance perimeter, the post session discussion revealed a number of UK businesses are unclear that The Markets in Financial Instruments (MiFID) II regulation requires an all-encompassing e-communications governance. In addition, many firms seemed to be grappling with the oversight implications of the explosion in application based versus device based communications, with firms unaware that regulatory obligations can so often now apply to both personal and business owned devices.
Somewhat more puzzling however was the high levels of social media prohibition across firms that we learned about at the event. Despite social media currently being used by marketing and subject matter experts for brand awareness and thought leadership, it still does not appear to be used business wide. It seems that whilst UK firms are braced for change, they are yet to embrace the process or tools to help them meet this change head on and ensure they fully comply.
Encouragingly the event was well attended by both marketing and compliance professionals; some even with hybrid roles. And it struck me that the collaboration between these two– historically opposing– departments is growing. Education and awareness raising is helping to shift the perception of compliance as ‘bad cop’. Some firms are truly reaping the rewards of ensuring their compliance and marketing teams work together on campaigns and are embracing a new pre-emptive approach to compliance.
Enlightened as the previous example is, there is still concern that too cumbersome an approval / sign off process can negate the immediacy that social channels offer. Almost all of those on the discussion panel, the advertising journey – from idea to approval, agreed this was a challenge.
As part of a solution, many companies talked about the emerging theme of “self-sign off”. This growing practice essentially empowers compliance (non HQ based) and marketing professionals to self-sign off financial promotions and customer facing collateral. The vast majority of those at the event are working towards this and in particular are considering this route to serve social channels, such as Twitter, that are fast paced, live and instant. The consensus was that, in the future, self-sign off and individual accountability for an ever-expanding set of business communication channels might well be the only way to enable a successful companywide usage.
Overall the event was a welcome reminder that there is much to be done to help UK businesses effectively meet the compliance challenge presented by evolving regulation. Firms have a plethora of regulatory reform to contend with including preparation for MiFID II and ongoing ePrivacy reforms. Not to mention the increase in channels for compliance to retain within their perimeter.
For those firms in the throes of evaluating solutions to help supervise and retain their e-communications, whether for MiFID II compliance or business efficiencies, it is worth investigating a comprehensive archiving solution. To get a feel for the core feature-benefits of such a solution, view this short video of the Smarsh Comprehensive Archiving Platform™.
We’re excited to announce that Smarsh has been named a Top Player in The Radicati Group’s Information Archiving — Market Quadrant 2016 report. This is the sixth year in a row that Smarsh has received the Top Player ranking.
The Radicati Group’s market analysis of archiving solutions is a four-quadrant system that categorizes vendors as Top Players, Mature Players, Specialists or Trail Blazers, based on market share and functionality. This year, Smarsh was one of only seven providers recognized as a Top Player, defined as “the current market leaders with products that offer, both breadth and depth of functionality, as well as possess a solid vision for the future.”
The report notes Smarsh offers clients a consistent and comprehensive set of search and review, policy, production and reporting tools across their organization’s email, social media, instant messaging, mobile messaging and Web content. For financial firms and others in highly regulated industries that need to regularly monitor archived content for regulatory compliance, Smarsh provides a highly specialized Supervision workflow designed to enable policy-driven monitoring and efficient team-based content review.
The Radicati Group highlighted the intelligent archiving capabilities of the Smarsh Archiving Platform, where messages are ingested, indexed and retained in a search-ready state in their native format as opposed to having non-email content converted to email. This allows fast search and review by unique elements and objects of each message type. It also enables a real world contextual view, where, for example, a user searching for a Facebook post will see the full context of the conversation, including files and comments that may have been added at a later time.
We’re always working to stay ahead of the rapidly evolving electronic communications environment, with solutions that address your message archiving and supervision requirements for compliance and e-discovery. We’d like to thank all of our customers, partners and employees for your ongoing support as we strive to develop solutions that give companies the most effective and efficient archiving tools available on the market!
For the second year running Smarsh is canvassing the opinions of UK based compliance professionals. Along with the US survey, now in its sixth year, the UK study offers a trusted insight into the global financial services community and examines how compliance professionals meet their regulatory obligations.
With increased regulatory scrutiny in the UK, including the new expanded recordkeeping and supervision regulations dictated by the Markets in Financial Instruments (MiFID) II Directive, the Smarsh survey indicates how organisations are responding to this challenge. And specifically highlights how businesses are managing the retention and oversight of all electronic communications (including social media, instant messages and SMS/text messages).
Today, we kicked off the 2016 survey for the UK market and we invite the views of all those responsible for compliance within financial services businesses. Our survey is available here and will only take approximately 15 minutes of your time to complete. We also encourage you to share the link with your colleagues, but please rest assured that all answers will remain anonymous.
Findings from the Smarsh 2016 UK survey will be analysed alongside those from last year which revealed:
- Commonly overlooked gaps in electronic message compliance programs
- The importance and complexity of message supervision
- Challenges and trends for producing electronic communications during regulatory examinations
As a token of our thanks for your valuable insights, we will share our research findings with you ahead of publication. And for all completed responses, you will have the chance to win two tickets to Wimbledon Championships on the 7th of July* for the ladies semi-final. We invite you to take the Compliance Survey now!
*The survey needs to be completed in full in order to get the chance to enter the prize draw for Wimbledon Championship tickets. The winner will be randomly selected from the pool of responses and informed via email on the 24th of June 2016
Most businesses are aware of the Markets in Financial Instruments Directive
(MiFID) II and how it will impact them from a trading governance perspective, but many have yet to get their heads around how the new, expanded rules will affect their recordkeeping requirements.
Whilst the deadline for implementation continues to be pushed back, the requirements for recordkeeping are both certain and extensive. It is important firms start to consider and prepare for the new rules now, to avoid running out of time in preparation for MiFID II compliance
From the 3rd of January 2018, businesses will be required to have systems and processes in place to capture, retain and reproduce complete records of all services, activities and transactions on both firm and client accounts. And this includes ALL telephone calls and forms of electronic communication.
Smarsh is on hand to help businesses prepare for the changes and navigate the new landscape. In the first in a series of white papers on this issue, we summarise the revised telephone and digital communications recordkeeping requirements and outline a suitable comprehensive archive approach to recordkeeping; the most reliable, efficient and cost-effective means for firms to demonstrate they are MiFID II compliant.
Telephone and Electronic Communications Recordkeeping – a game changer
Aimed at improving investor protection, MiFID II requires a much stricter governance process for all forms of communication, disclosure and transparency. Taking recordkeeping to a whole new level, businesses will now have to include not just communications that conclude in a trade, but all those telephone conversations and electronic communications that are intended to conclude in a trade.
Furthermore, businesses will be obliged to retain all these communications for a period of 5 years and in some cases 7 years, depending on the local jurisdiction. This will mean an ‘all-inclusive approach’ to communication management. Firms will have to ensure electronic communications and telephone conversations on both privately owned and firm issued equipment are being captured, supervised and retained, for permanent and contracting staff. If a business is not in a position to record or copy communications made from privately-owned equipment, they will be at risk of non-compliance.
The sheer scale of MiFID II legislation, and its associated regulations is immense but by starting to prepare for the electronic communications and voice regulation obligations now, firms can be ready for the MiFID II implementation date and rest assured they will have met the European Union’s trading community deadline for compliance.
To satisfy the full scope of requirements, we believe firms will be best served by a single, comprehensive archiving solution and we are here to help. Download our ‘Preparing for MiFID II & MIFIR Recordkeeping’ White Paper for some helpful tips or get in touch via 0800 048 8612.
Read this paper to better understand and help you prepare for these requirements now, ahead of the MiFID II implementation date January 3rd 2018.
Download our paper for more information on:
- Who the new rules affect
- What the expanded governance means for your firm
- The specifics of the new voice and electronic communications recordkeeping requirements
- How a comprehensive archiving solution can help you demonstrate MiFID II compliance readiness