A survey shows that more than one third of financial institutions in the UK are unprepared for MIFID II- less than 30 days before the regulation kicks in and is set to completely transform companies’ compliance requirements.
The research was carried out by UK managed cloud service provider, Timico.
While 39% of UK organisations are said to be unsure whether they are compliant are not, only 8% of company employees said they understood the repercussions of not complying with the rule and have received training.
Considering companies can be fined up to €5m or 10% of company turnover for non-compliance with MIFID II, the fact that only 8% of respondents said have been trained may come as a surprise.
The updated Markets in Financial Instruments Directive (MIFID II) is a key EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ such as shares, bonds and directives. It comes into force on 3 January 2018.
Recital 57 of the directive will require firms to record all communications that are intended to result in a transaction. This is designed to increase transparency and accountability in financial markets.
Regardless of the source, recordings must be stored for at least five years.
The research also highlighted:
- Only 14% of staff are unaware of what processes are required to be compliant
- Some 37% are in the process of initiating a training programme
- 41% employees don’t know if staff were aware of the legal requirements of MIFID II or had received any training on the legislation.
The research identified another key concern.
Some 42% of businesses said they do not have a mobile compliant platform in place to record phone calls. Several financial market participants at times use their own devices, primarily mobile phones, or laptop devices while working remotely. This means that companies will be required to get compliant systems across all communication platforms, extending to personal devices.
Kevin Linsell, chief technology officer at Timico, said: “The fact that nearly half of UK financial organisations that we have surveyed currently have no mobile compliance platform in place is highly concerning. As teams are constantly travelling between markets and working remotely, it is essential companies get compliant systems in place for not only mobiles, but across all communication platforms to ensure they meet the January deadline.”
The research was conducted in November 2017. Some 500 participants were polled in the finance sector, including IT managers, IT directors, CTOs, CEOs.