Article : MiFID II – How a European Directive will Change the World
MiFID II is hanging like a sword of Damocles over European financial institutions. But as we are coping with increasing globalization, MiFID II isn’t limited by Europe’s borders. Moreover, even if MiFID II does not affect your organization immediately, meeting its requirements will ensure a competitive edge in the future.
MiFID II Background
The initial MiFID (Markets in Financial Instruments Directive) regulations were implemented in 2007. The EU directive improved investor protection and increased competition within financial markets. Moreover, MiFID increased transparency and harmonized the financial markets in Europe thanks to the enactment of similar conditions for all European nations.
However, the global financial crisis delineated many of the weaknesses of MiFID and led to MiFID II, designed to tighten regulations throughout the European Union.
MiFID II regulates all counseling in the securities industry - even preliminary interactions - by recording and archiving the entire communication. Upon any client’s request, a financial institution must provide this recording as an audio file or a written transcript. This rule ensures investment firms can verify any customer order.
MiFID II was launched on July 2, 2014 and will be enacted by all EU member states as of July 3, 2016. Full compliance with the regulatory laws will become mandatory on January 1, 2017. National supervisory bodies will apply harsh sanctions against any financial institutions violating MiFID II.
Global Impact of MiFID I
When MiFID was initially implemented in 2007, Roel C. Campos, Commissioner of the U.S. Securities and Exchange Commission, said, "Certainly US-based firms will need to comply with MiFID’s requirements in order to deal with European clients, counterparties or business partners. As such, MiFID will have an impact on US firms, but the degree of impact will vary depending upon the US firm business model. Those US firms, therefore, that plan on participating in European markets must, of course, comply with MiFID. Accordingly, MiFID's standards will influence investors in the US and across the world." In the same way, MiFID II will generate international reaction.
Moreover, the Great Recession of 2007 showed us that other nations besides the European Union may quickly implement compliance regulations similar to MiFID II. For example in the United States, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 14, 2010. Preparing today for tomorrow’s challenges will help financial institutions all over the world react quickly to new or developing legal situations while still maintaining and enhancing their market position.
MiFID II Challenges
One of MiFID II’s core challenges - the complete recording of all counseling interviews - can be handled through implementation of a Communications Recording solution. The chosen solution should offer:
- Secure recording of all communication channels;
- Multiple and secure archiving scenarios;
- State-of-the-art encryption methods;
- Flexible redundancy scenarios for fail-safe operation;
- Search options to find and analyze conversations;
- A complex access-rights management system based on true multi-tenancy.
Even on a voluntary basis, complying with MiFID II rules helps financial institutions based outside of the European Union achieve a competitive edge.
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About Katrin Henkel:
Katrin Henkel, currently the Vice President of Sales and Marketing for ASC Technologies, has served with the company for more than 15 years. Previously, she worked for Siemens and obtained a degree from the Graduate School of Business Administration in Zurich, Switzerland.
ASC is a worldwide software company with a variety of solutions to record, analyze and evaluate communications. All multimedia interactions in contact centers, financial institutions and public safety organizations are documented and analyzed. The content of communications becomes transparent, critical information is generated and market trends are revealed, providing real-time business intelligence for immediate management action. With subsidiaries in the United Kingdom, France, Switzerland, the United States, Brazil, Japan, Singapore and Dubai, as well as certified and vastly experienced distribution partners, ASC’s ambitious projects span more than 60 countries. Headquartered in Germany, ASC is a global player with an export quota of almost 70 percent and a worldwide service network.
Published: Tuesday, November 24, 2015