ESMA relaxes MiFID II call recording rules in wake of COVID-19
The European Securities and Markets Authority (ESMA) has issued a public statement on the relaxation of call recording rules under the second Markets in Financial Instruments Directive (MiFID II).
ESMA recognises that firms hit by COVID-19 may struggle to comply with MiFID II
Under the regulation, firms are required to record telephone conversations and electronic communications that relate to “the reception, transmission and execution of orders”.
As a minimum, the date and time of the meeting, the location, the identity of the attendees, the initiator of the meeting, and all relevant information regarding the order must be recorded.
ESMA understands that employee circumstances have changed during the spread of COVID-19, and some scenarios may emerge where “the recording of relevant conversations required by MiFID II may not be practicable”.
It writes: “If firms, under these exceptional scenarios, are unable to record voice communications, ESMA expects them to consider what alternative steps they could take to mitigate the risks related to the lack of recording.”
Related: ESMA issues final report on SFTR
These alternative steps include the written recording of minutes (something not usually deemed valid by MiFID II), and a more comprehensive analysis and monitoring of orders and transactions after their execution.
Despite this, ESMA still expects firms to deploy “all possible efforts” to ensure that the measures remain temporary and that the recording of telephone conversations is restored “as soon as possible.”
Earlier this month ESMA postponed the start date for the Securities Finance Transactions Regulation (SFTR), also in response to the spread of COVID-19.
The regulatory body also postponed the start date of the Central Securities and Depositories Regulation (CSDR) settlement discipline regime (SDR), due to come into force in September.
