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.