Mobile phones are becoming an increasingly important tool for asset-managers who have to conduct trades and compliance efforts are catching up. Regulators are insiting that conversations and the data from these conversations must be recorded. This has not always been the case.

In 2004, the European Union issued the Markets in Financial Instruments Directive (MiFID) which was designed to standardise or, in EU parlance, 'harmonise' financial regulation in Europe. MiFID stated that all calls relating to financial trades must be recorded. However, this legislation did not apply to mobile calls due to the limitations of the technology of the day.

With the advance of technology, the UK's Financial Services Authority amended its conduct-of-business sourcebook (COBS, section 11.8) and removed the mobile exemption. In November 2011, after years of objection, the regulation was changed and it now requires the recording of mobile calls. It was thought that evidence gathered from these calls would help to tackle insider-trading and market-abuse, make pricing more efficient and increase confidence in the markets.

Call compliance is not a new issue but there are still uncertainties to do with who is implicated, the severity of the likely consequences for businesses and the operational costs associated with it.

Nearly two years since the introduction of the regulation, our research suggests that as many as half of the UK’s financial organisations may still be exposed.  It is evident from recent fines - and these are no parking tickets - that non-compliance is a very costly option.

An essential part of modern business

Regulation is changing the financial services sector's approach to mobile technology and yet many financial organisations seem to be burying their heads in the sand. What choices do they face? Several options exist at the moment. Some organisations forbid the use of mobiles; some have chosen to redirect calls through a downloadable app; and others have chosen a built-in SIM.

It is not a realistic option to ignore mobile trading. A modern business cannot stop because someone is not at his desk. App-based solutions have to rely on the rerouting of calls, which often leads to time delays and potentially the degradation of the quality of calls. Feedback from the market shows that the App solutions are clunky and, more worryingly, easy to by-pass. This leaves financial organisations open to risk.

Teleware has developed innovative software in our SIMs to trigger recording on all mobile devices – smart phones or tablets. We have found this approach to be the most elegant and robust.

Working away from your desk: no longer an option 

In addition to the increasing regulatory pressures, we are now living in a 24/7 world. This poses a serious threat to organisations. It is more or less a given that traders have to use mobile phones to communicate and we cannot ignore this. Technology makes it possible for people to work effectively from anywhere in the world, 24 hours a day. It simply makes no sense to restrict your employees.  

When flights are grounded, trains cancelled and roads closed due to freak weather, such as the recent 'St Jude' storm in the UK, the world can grind to a halt and movement is practically stopped. Traders can become stuck at airports or far from their offices. However, if they are equipped with mobiles they can go on trading to some extent and at the very least can make vital calls. The ability to work away from one's desk is a crucial part of global business and it is vital for traders to remaining connected while away from their desks. To be able to stay competitive and agile, businesses must incorporate mobile phones into their business continuity planning.

Why you should Bring Your Own Device!

BYOD is a vital issue facing financial organisations. The simple truth is that choice is central to adoption. With a workforce which is 'time-poor and tech-savvy,' financial organisations must find solutions that make mobiles easy to use and that allow people the freedom to choose their own devices. They must, in other words, allow them to change their devices with a minimum of effort but also with the confidence that they are always 100% compliant.  

The UK is leading the way on the issue of mobile call compliance but with the introduction of increasingly complex global regulation, such as the American Dodd-Frank Act, the topic of mobile call recording is spreading across the globe.

Regulation is changing the face of the financial services sector globally, in a way that it was not doing even two years ago. The question that financial organisations ought to ask themselves is – "are we compliant?"

Steve Haworth is the CEO of TeleWare. He can be reached on +44 (0) 1845 521250.