In a month’s time most brokerage firms in the US will be forced to adopt measures to maintain records of all mobile communications.
The rule mandated by the Dodd-Frank Act will come into force as of 21st December and will include the recording of both voice and SMS texts.
Under the new legislation, firms trading commodity futures, options, swaps and foreign exchange contracts must record oral communications if they have more than $5m in gross revenues.
However, some firms are being granted alternative compliance schedules if they are actively trying to comply with these new enforcements but have so far been unable to do so.
CFTC recordkeeping requirements demand firms to have the ability to quickly and accurately reconstruct trades, including pre and post trade communications (across all electronic communication formats including emails, files, voice and third party messages) and to stamp records with the coordinated universal time to the nearest minute.
The Dodd-Frank Wall Street Reform and Consumer Protection Act sets to create regulatory compliances processes to enforce transparency and accountability in the finance industry.
Similar rulings from the SEC and FINRA has resulted in a whole new set of challenges causing institutions to review their business practices on how they comply with these obligations.
The US Dodd Frank Act follows in the footsteps of the UK’s FCA which, in November 2011, enforced a regulation that all financial institutions’ mobile recording must be recorded.
The rulings are similar, however, the FCA regulations are only applicable to UK financial institutions and recordings are stored for a minimum of 6 months; while the Dodd Frank’s extraterritoriality means that foreign banks, such as those in Asia, must comply with the new regulations if they want to continue to trade with the US.
These regulations in both the UK and US are based on the assumption in determining market abuse, which covers a range of qualifying investments or related instruments admitted to trading on a ‘prescribed market’.
