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ESMA Publishes Statement on MiFID II Telephone Conversation Requirements During the COVID-19 Pandemic

On March 20, the European Securities and Markets Authority (ESMA) issued a statement to clarify how credit institutions and investment firms can handle the issue of recording telephone conversations under the revised Markets in Financial Instruments Directive (MiFID II) during the continuing COVID-19 pandemic (the Statement).

In the Statement, ESMA noted that under MiFID II, firms are required to record telephone conversations relating to transactions concluded when dealing on its own account and the provision of client order services that relate to the reception, transmission and execution of orders. ESMA also noted that due to the current exceptional circumstances, it may not be practicable in some instances, despite steps taken by firms, to record the relevant telephone conversations. If firms are unable to record such conversations, then ESMA expects them to consider what alternative steps they could take to mitigate any consequential risks.

ESMA does expect firms to deploy all possible efforts to ensure that these measures remain temporary and that recording of telephone conversations is restored as soon as possible.

In the UK, the UK’s Financial Conduct Authority (FCA) has published a webpage on information for firms on COVID-19 response. Among various issues covered, the FCA states that it expects firms to continue to record calls, but that it accepts that it may not be possible to do so. In this case, firms should notify the FCA of their inability to record calls. The FCA also expects firms to consider what steps they could take to mitigate outstanding risks if they are unable to comply with their obligations to record voice communications.

ESMA’s Statement is available here.

The FCA’s webpage is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 87

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About this Author

John Ahern, Financial Attorney, London, Katten Law Firm
Partner

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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