The Markets in Financial Directive Instruments Directive (MiFID)
harmonises the regulatory regime for investment services across the
30 member states of the European Economic Area (the 27 Member
States of the EU plus Iceland, Norway and Liechtenstein).
Article 51 of
MiFID (33-page / 213KB PDF) demands the retention of certain
records by financial firms for at least five years. Others must be
kept for the duration of the relationship with a client. A firm's
retention must be in a manner that allows national regulators "to
access them readily and to reconstitute each key stage of the
processing of each transaction".
This causes a problem for firms, according to the independent
think-tank JWG-IT. It claims
that 64% of financial firms say they cannot reconstruct events
after the fact in reasonable timeframes or cost levels.
PJ Di Giammarino, CEO of the London-based group, warned that if
record keeping is done incorrectly, it could falsely trigger or
hide market abuse issues.
“If you get caught out with it wrong, it could cost you hundreds
of thousands of euro in fines," he said. "If what you have given to
the regulators, the market and your customers does not match what
you hold internally for up to five years from 1st November, you are
exposing yourself to new risks."
"Record keeping is a big problem and we are working with the
industry to make senior management more aware of their new
responsibilities under a principles based regime,” said Di
Giammarino.
JWG-IT is appearing at the Storage Expo, at
Olympia, London, this week.
