A Closer Look at MiFID II Recording Requirements

The Markets in Financial Instruments Directive II (MiFID II)—arguably the greatest reform to hit Europe’s financial industry—is finally in effect as of January 3, 2018. This EU legislation serves as a much-needed upgrade from the original MiFID, enacted in 2004, and addresses key issues that resulted from the 2008 global financial crisis.

The directive requires all national governments in the EU to adopt certain laws, which they are free to do in their own way should the resulting effect be the same. Financial services institutions—specifically investment firms, credit institutions and trading venues—are subject to MiFID II, including companies that are headquartered outside of the EU but do business there (for a more thorough overview, see this blog by industry analyst Sheila McGee-Smith).

Recording Regulations: Raising the Bar

Perhaps the greatest impact of MiFID II is the law’s tighter recording regulations. Under the 2004 MiFID directive, there was no mandatory requirement to record communications involving client orders. To ensure fairer, safer and more efficient financial markets, MiFID II now requires firms to record communications (both phone and electronic) for the following investment services:

  • Reception and transmission of orders
  • Execution of orders on behalf of clients
  • Dealing on own account (takes place when a firm puts its own trading books at risk)

The specific customer interactions that are required to be recorded in relation to investment services include:

  • Receipts of client orders
  • Transmissions of orders (both where the investment firm transmits and executes the order)
  • Conclusions of transactions when executing orders on behalf of clients
  • Conclusions of transactions when dealing on own account, regardless of whether a client is involved in the transaction

Important note: MiFID II covers all communications relating to activities intended to result in the conclusion of a transaction or the provision of client order services, even if they do not result in a financial transaction.

Communication of orders placed through channels other than voice—postal mail, faxes, emails, SMS, face-to-face conversations recorded using written minutes—must be stored in a durable medium.

Keep in mind a few rules that apply to this ‘durable medium’:

  • Records must be able to be replayed or copied
  • Records must be retained in a format that does not allow the original to be altered or deleted
  • Firms are required to ensure the quality, accuracy and completeness of all phone records and electronic communications
  • Records must be kept for a minimum of 5 years and, if requested by the National Competent Authority in a specific country, up to 7 years
  • Clients must be notified in advance of recording
  • Records must cover communications made with, sent from or received by equipment provided or permitted by the investment firm (privately-owned equipment used by employees or contractors is not prohibited)

Ensuring Compliancy with MiFID II Recording Regulations

If your business is involved in financial services in any way—even if it’s not your main focus (i.e. credit institutions performing investment activities, branches of third country firms)—you’ll need to investigate to understand whether this new legislation will affect you and, if so, what you need to do to comply.

We recommend a thorough review of compliance across all channels (including back office processes) to determine if they meet the new regulations. If not, you’ll need to deploy a workforce optimization (WFO) solution to demonstrate that policies, procedures and management oversight of the new recording and monitoring rules are in place. Here’s what you’ll need to consider in a WFO solution:

  • Continuous recording: This goes for all inbound and outbound voice and other electronic communications based on business rules. You need a WFO solution that will capture, search and retrieve calls, offer encryption for secure storage, and offer pause and resume capabilities.
  • Desktop screen capture: This is an undetectable back-end process that records desktop screen activity during each customer interaction. Supervisors and managers can use this both in the contact center and back office to view customer interactions from beginning to end via synchronized screen and call recordings.
  • Quality management monitoring: Identify and capture areas of non-compliance, while measuring how well employees are delivering services that align with customer experience expectations.
  • eLearning and coaching tools: Bring employees fully up to speed on regulatory changes and any new requirements, as well as correct any non-compliance behaviors.
  • Voice analytics: Proactively identify, measure and isolate areas of non-compliance by mining intelligence from large volumes of recorded calls.
  • Workforce management: Schedule employee compliance training while ensuring you have enough support personnel with the right skills to serve customers.

The greatest threat to reputability, revenue and customer experience is the thought that your technology is “good enough” to meet current needs. Your ability to innovate and grow are hinged on technology that meets the next-gen needs of today, tomorrow and beyond—something that only 24% of companies say their workforce optimization and recording systems achieve.

To complete a thorough review of your current MiFID II processes, connect with Avaya. For a deeper dive into MiFID II (including a few WFO features not mentioned above) download the white paper MiFID II: What Does it Mean for Your Organization?

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Kari’s Law: An Emotional Journey Leads to a Bittersweet Ending

Our long journey leading up to the presidential signing of Kari’s Law began well before the precious life of Kari Hunt tragically ended on Dec. 1, 2013. (Learn about Kari’s story.)

For me, it actually began in the spring of 2013 when I noticed a sign on my hotel door, which read: “In case of an emergency, dial 0 for the operator.” I remember thinking, “The operator isn’t trained to handle an emergency. I should be able to dial 9-1-1 from my room phone.”

Sadly, this occurrence wasn’t an anomaly. I found it to be a common bad practice adopted by too many hotels across the United States.

There’s no doubt their intentions were good. Hotels were looking to be proactive, and they wanted to expedite not delay emergency response times. To make matters worse, direct access to 9-1-1 from Multi Line Telephone System (MLTS) was flawed because guests couldn’t dial 9-1-1 directly. They needed to dial an extra 9 just to get an outside line. That proved to be a fatal flaw in Kari’s case because her 9-year-old daughter couldn’t get through to 9-1-1. MLTS legislation also didn’t exist or, if it did, it was limited to a handful of states, and much of that dealt with the reporting location. It didn’t address the issue of access and notification.

Throughout the year, I used social media to increase awareness and drive meaningful change. I spoke at conferences and even began a podcast series dedicated to this very topic.

Then one day in December 2013, everything changed. My Google Alerts for 9-1-1 came up with a Change.org petition that was raised by Hank Hunt after his daughter Kari was brutally murdered in her hotel room.

I reached out to Hank on Facebook and offered to help him in his cause. Having an innovative tech leader like Avaya backing me increased Hank’s confidence in my ability to help him bring about the changes he sought.

My previous experience immediately proved useful, and we were able to go straight to the top at the FCC. (I had served on the Emergency Access Advisory Committee under Chairman Julius Genechowski, who had just turned the agency over to Chairman Tom Wheeler. Talk about timing!)

Following a number of tweets and letters, including an Open Letter to the FCC Chairman Wheeler, we received a call from Commissioner Ajit Pai’s office and a meeting was scheduled for Jan. 10, 2014. That meeting turned into a 45-minute discussion on the issues, the fix, and the challenges we faced.

Over the next several months, Hank and I garnered the interest of legislators in cities and states across the country: Suffolk County in Long Island, the state of Illinois, Maryland, et al.

In Texas, Avaya participated in hearings, and offered our unique expertise. We introduced the idea of a “Waiver Clause,” which stated that a business could obtain an exemption if they showed financial hardship. With the exemption was the requirement to register the make and model number of the system. This uncovered many systems that were actually capable of being compliant, and eased the adoption of the new law.

More states followed embraced the legislation—it was a full-on domino effect—except at the federal level where every attempt to bring a bill to life stalled. But then in 2018, that changed too.

After an all-night session ending on Feb. 9 on what would have been Kari’s 36th birthday, the House of Representatives passed the Senate amendment of H.R. 582, and it was officially on the way to the president of the U.S. for signature.

We quietly celebrated, knowing Kari’s murder would not be in vain.

The cherry on the cake was being invited by Hank, Kari’s father, to witness the president sign the bill into law on Feb. 16, 2018. I was both humbled and honored, and invited my former colleague Avaya Sales Engineer Dan Wilson to enjoy the moment with us. Dan had worked tirelessly on this legislation, clocking 12 miles of walking in the Maryland House and Senate.

The West Wing is everything you’d imagine: intimidating, wonderful and a once-in-a-lifetime experience. It was a pleasure to not only stand beside Hank and witness the signing, but to also be in the company of people who supported our endeavor since day one: Ajit Pai, my good friend and now Chairman of the FCC, Congressman Louie Gohmert who introduced the bill, as well as other Congressional reps with interest in public safety. After reading a prepared statement, President Trump uncapped the ceremonial pen and placed it on the paper. As it started to move, we were overcome with emotion. To think, 50 years to the day, and quite nearly the minute, following the first ever 9-1-1 call, Kari’s Law had become the “Law of the Land.”

Transforming Online Meetings for Team Collaboration

I find it interesting how companies choose to measure team collaboration. Most use surveys, some productivity data, and others standard review processes. Yet team collaboration is about so much more than all of this. If you ask us, it’s about putting people first.

We mean this quite literally. It’s important to provide employees with a suite of face-to-face collaboration capabilities that enable dynamic, real-time team collaboration. Communication staples like voice and chat are surely important, along with the endless other tools teams use to connect and share information. Meeting via video, however, is arguably the best way to collaborate, build relationships, create momentum and build morale. Face-to-face collaboration may not always be needed, but companies will want to make sure they have the best tools in place for when it is.

When done right, online meetings enhance team collaboration in several ways. Consider the most basic of them all: a good part of communication is non-verbal. Being able to observe team members’ body language can help prevent miscommunication and connect across languages and cultures. The technology has also evolved to the point where teams can flexibly share data, documents and other project details via screen sharing or virtual whiteboards. All the while, there’s the opportunity to initiate private chat sessions between team members to discuss simultaneously.

The bottom line: online meetings enable authentic human interaction that delivers real value, time and cost savings, and better business outcomes.

Now, imagine being able to quickly implement an easy-to-use, cost-effective service that skips the capital investment and technical hassle of a traditional video solution. This is exactly what Avaya Equinox Meetings Online offers: a cloud-delivered application that allows users—both employees and outside contacts—to connect with their browsers (no plug-ins required) or mobile apps to effortlessly initiate and/or participate in online meetings. The service places priority back on people, which is where it belongs. Simple as that.

Don’t believe us? Read Nemertes Q4 2017 Enterprise Business Value Matrix for Unified Communications and Collaboration to see what they had to say. If you like what you see, or if you have any questions, please feel free to reach out to our team for more information via our webchat.

The Easy Button for IoT

I am sure that I don’t have to tell you how the Internet of Things (IoT) is revolutionizing our world. Stop by any electronics retailer and you will find smart TVs, smart lights, smart refrigerators, and smart thermostats. Open up the brochure for a new car and you will find more space dedicated to intelligent sensors than horsepower. Tour a modern manufacturing plant and you will quickly discover that nearly every machine used in production has been equipped with an IP address. From the consumer to the enterprise, IoT is the driving force of innovation.

Of course, there is a dark side to this revolutionary technology: It’s not all that easy. As a consumer, it’s not a big deal to have one smart dryer that sends a text message when your clothes are dry. It’s also pretty simple to have your refrigerator email you a photo of its contents. In these cases, it’s just you and your machine.

However, what if you had a thousand dryers and ten thousand refrigerators. Let’s take it further. What if you were American Airlines and your fleet of airplanes had five hundred thousand different sensors reporting information every second. Now, imagine that some devices reported data using Bluetooth while others used Zigbee, WiMAX, LTE, WiFi, and NFC. Want to make it even more challenging? These different sensors report data reading using SOAP, REST, WebSockets, and a myriad of proprietary protocols. It quickly becomes an engineering nightmare to collect, store, and take the appropriate actions on this constant stream of data.

One Bite at a Time

Question. How do you eat an elephant? Answer. One bite at a time.

As with an elephant, the best way to conquer the IoT problem is to break it down into bite-sized pieces. Instead of trying to directly deal with all those different sensors and their unique forms of communication, have those sensors talk to gateways that understand multiple IoT dialects. Those gateways could then normalize the data before sending it off to a central cloud repository. Next, wrap the IoT cloud with web services that allow for a consistent and uniform way to access IoT data. Finally, use those web services to create a suite of applications for data visualization, event processing, analytics, etc.

Now, instead of being inundated with terabytes of data that may or may not be important, you only see what you need to see and only when you need to see it. You also have a scalable platform that allows you to add new sensors without having to constantly redesign and redeploy your business applications.

At Arrow Systems Integration (ASI), an Avaya A.I.Connect partner, we call this distributed architecture of sensors, gateways, and cloud services Arrow Connect™.

Arrow Connect

Arrow Connect is a software architecture that connects any device over any protocol to any cloud. Designed and developed by Arrow with security, scale, flexibility, device management, multi-tenancy, hierarchy, open APIs, and extensibility as its core principles, Arrow Connect is helping customers across multiple industries bring their products to market faster.

The Arrow Connect software development kit (SDK) helps enterprises leverage the full capabilities of any device while an extensible software gateway allows developers to add support for protocols and sensors not currently supported by Arrow Connect.

The Arrow Connect cloud platform enables secure provisioning and management of all its devices. It runs on multiple public cloud platforms and seamlessly integrates with Microsoft Azure, IBM Watson Bluemix/Softlayer, Amazon Web Services, and private data center solutions.

Breeze and Zang Workflows

While support for RESTful web services is essential to being an open and secure cloud solution, this comes with a price and that price is complexity. Despite being an open standard understood by most software developers, the fact that you must be a developer to use web services confines them to a very select group of people.

In our quest to find every possible way to simplify IoT, ASI has partnered with Avaya to add support for Arrow Connect IoT devices, sensors, and gateways into Avaya Breeze and the Zang Workflow Designer. With both of these platforms, access to IoT data and Arrow Connect services becomes as simple as drag and drop and non-developers can create powerful IoT solutions in a matter of minutes. Better still, this simplification does not come at the cost of accuracy, reliability, speed, security, or scalability. The visual tasks embedded in these workflow tools employ the same Arrow Connect web services a skilled software developer would use. The difference is that there is no need to learn Java, .Net, Python, or any other programming language.

 

The Easy Button for IoT

With integrated workflow technology, you can quickly turn an idea on a whiteboard into a fully functional and easily deployable solution.

Next Steps

McKinsey recently said that “Any business that fails to invest heavily in the IoT in the next 10 years is unlikely to be able to remain competitive.” While these may seem like strong words, industry after industry has taken them to heart and the IoT revolution is everywhere. As I stated at the beginning of this article, IoT is becoming pervasive for both consumers and businesses.

The simplification, scalability, and security of IoT offered by Avaya and Arrow Systems Integration helps an enterprise to create the solutions it needs to enhance its business, grow its customer base, and stay competitive.

Andrew Prokop is the Director of Emerging Technologies at Arrow Systems Integration. Andrew is an active blogger and his widely-read blog, SIP Adventures, discusses every imaginable topic in the world of unified communications. Follow Andrew on Twitter at @ajprokop, and read his blog, SIP Adventures.