New research out today has found the Markets in Financial Directive Instruments Directive (MiFID) is creating added data retention problems as a result of its little-known Article 51.
Article 51 holds that regulators in Europe will have the right to reconstitute the key stages of a trade for each transaction, requiring financial services firm to prove that their actions conform to policy and that they are unable to manipulate any of the information around that trade for five years.
The article also mandates that customer records, which set out rights and obligations, shall be retained for the lifetime of the relationship with the client.
According to research unveiled today at Storage Expo by think tank JWG-IT, 64 per cent of financial firms identified that they have a problem with the Article 51 requirements. These firms cannot reconstruct events after the fact in reasonable timeframes or cost levels.
PJ Di Giammarino, JWG-IT chief executive warned conference delegates that senior management have to be more aware of their responsibilities associated with setting up their organisation's record keeping principles and data retention policies.
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 November 1 you are exposing yourself to new risks. Record keeping is a big problem."
Calling MiFID a "marathon not a sprint," Di Giammarino offered firms a top ten list of areas around storage, data retention and record keeping that will be key to demonstrating compliance with MiFID by its 1 November deadline.
The top ten is drawn from the operating readiness model of JWG-IT's MiFID special interest group and includes identifying who is responsible for key steps of a trade or transaction and ensuring they are aware of and conform to their record keeping responsibilities and ensuring a full transaction or trade audit trail can be produced that draws on all types of communication data like instant messages, emails, voice calls, SMS and fax.
