Mon, Mar 23, 2020

ESMA Statement On Recording Telephone Communications

The European Securities and Markets Authority (ESMA) issued a public statement concerning the application of the MiFID II telephone recording arrangements during the COVID-19 emergency. 

ESMA previously clarified in a Q&A  that the use of mobile devices to undertake activities related to transactions in scope of the MiFID II telephone recording requirements is allowed as long as the firm is able to record communications made on such devices.1 Where telephone recording arrangements cannot be put in place, firms are required to adopt alternative arrangements to ensure full compliance with existing requirements such as the use of recordable electronic communications instead of telephone communications. 

However, ESMA recognizes that, under the exceptional circumstances created by the COVID-19 outbreak, some scenarios may emerge where, notwithstanding steps taken by firms, the recording of relevant conversations may not be practicable (for example due to the sudden remote working by a significant part of staff, or the lack of access by clients to electronic communication tools). 

Where firms are unable to record voice communications under these exceptional scenarios, ESMA expects them to consider what alternative steps they could take to mitigate the risks related to the lack of call recording facilities. Such alternative arrangements could include the use of written minutes or notes of telephone conversations when providing services to clients, subject to prior disclosure to the client that the line is not being recorded. Firms should also consider enhanced monitoring and ex-post reviews of orders and transactions. 

ESMA also clarifies that it expects firms to employ all possible efforts to ensure that the above alternative measures remain temporary and that recording for voice conversations is restored as soon as possible.

The full ESMA statement can be found here.

1 See Q&A 10 in the ESMA Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics (Ref: ESMA35-43-349):

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