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MiFID

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Don’t procrastinate with preservation

22 February 2016  |  3964 views  |  2

The deadline for MiFID II might be delayed, but financial organisations should be wary of putting off their plans to reinforce archiving of client communications. With every piece of litigation, the pressure on the preservation of communications data grows, but by tackling the issue and addressing some of the key areas now, firms will be in a better position to defend themselves in the future.

Define the channels to be preserved

MiFID II clearly states that “all reasonable steps must be made” to capture phone and electronic records - not just email. But whether it’s VoIP, Skype, LinkedIn or other collaboration tools, each have their own idiosyncrasies when it comes to archiving. Deciding now which channels are approved based on the need in the workplace and challenges in preservation, will save time wasted in reactive measures at a later date.

Give data a permanent home

Every time data changes hands it increases the risk of introducing a point of failure. Take steps to ensure that the protection of data during litigation goes beyond simple reliance on chain-of-custody documents. Consider maintaining a full copy of data in place or using legal hold capabilities with archiving technologies to ensure an undisputed copy of data remains available.

Filter data for faster retrieval

Preserving data needs to be intelligently handled if you want to use it to your advantage. Systems that enable a tamper-proof archive of data filtered by various criterion such as custodian, keyword, date range and communication channel, help to reduce the amount of data required to be stored and lower processing costs. In addition, filtering makes it much faster to find and retrieve evidence should a transaction be disputed.

Create visibility

While automated archiving is an excellent way to ensure nothing is missed, don’t ignore the danger of human oversight. One of Apple and Samsung’s “she said, he said” battles over patents faltered when it became apparent that Samsung had forgotten to deactivate a biweekly removal of data from its email servers. Visibility into archive systems will enable legal teams to ensure the status of the data being preserved and provide them with the means to attest to those capabilities.

Follow conversations

Conversations today use any number of different channels. A customer complaint on Twitter might continue over email. Defining the terms of a trade can be faster on chat than using the original email initialising the deal. There are all kinds of legitimate reasons for switching to the most appropriate channel during a conversation. And a few dubious ones too.

Knowing who joined a conversation when and over what channel can be a nightmare to reconstruct six days after the fact, let alone six months. An archive that is going to save you time and money in litigation, as well as highlight any rogue trades, needs to deliver conversations in context as they switch between different channels and users.

MiFID II might be why firms are taking a closer look at how conversations are preserved within an organisation, but shoring up your defences against litigation is a more compelling reason for doing it now than waiting for compliance to be enforced.

TagsRisk & regulation

Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 23 February, 2016, 13:16

With exposure to developing and using social media archiving tools, I totally agree about the platform-specific idiosyncracies - Twitter API supplies only the last 2K tweets, LinkedIn stores content only for 1 month, and so on.

In that context, I was wondering how past data is handled by archiving solutions. Will it get archived or will the solution begin archiving only communications that happen from the date of implementation.

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A Finextra member
A Finextra member | 26 February, 2016, 13:26

Archive vendors are limited by what the network's APIs permit. For instance, on Twitter, we are currently able to go back 200 tweets. For LinkedIn & Facebook by default we go back 24 hours after our application is authorized.  These change periodically, so I recommend checking the API guidelines on the networks before making any promises about retrieving past postings.

 

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 26 February, 2016, 19:17

So, an enterprise remains liable for unarchiveable past social media posts even after spending money on buying and implementing an archiving solution. That must be a significant dampener on the business case for an archiving solution.

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