Archives: News Room

A conversation with Maria Latorre, Global Head Channel Management and Vanessa Higuera, International Channel Support Manager at IPC Systems for Revista Gerencia – first published July 2017.

Recognized for its technology on the financial sector, IPC Systems has important expectations in the Latin American region and specifically the Chilean markets. A key strategic partner for this is Wittel, through whom IPC hopes to bring new solutions with added value.

How important is Wittel’s role for the brand?

M. Latorre: We have about 33 offices worldwide, in some of those regions and whenever we do not have an office we work with chosen Channel Partners to market our solutions. Globally, Wittel is one of the most strategic partners: it accounts for 56% of total turnover in Latin America and Central America, and 13% of total turnover worldwide.

How does Wittel contribute to the IPC technology?

M. Latorre: Wittel knows perfectly the market and the evolution of customer needs, both in Chile and Brazil. This is very important because it shows that they understand the issues and they position themselves as a trusted advisor. They also have a specialized team dedicated to the IPC solutions, which enables the customer to have the best customer experience at the service level. These are the main characteristics we look into when defining a strategic partner.

How are they projected in the Chilean and regional market?

M. Latorre: We have great challenges. Today – IPC is the global leader of the Trading Communications market. We want to get out of our “comfort zone”, and launch new solutions in indirect markets. We encourage partners like Wittel to become experts and bring the latest technology to the market because that is what our customers are waiting for.

With Wittel we have a large footprint in the region with approx.. 2700 positions. We want to take advantage of its experience, knowledge of the service and its strengths locally, to deliver more added value.

What are these other solutions?

M. Latorre: Our goal is to address the market needs related to compliance. There are a number of regulations that have been implemented in the United States and Europe, which will sooner or later have an impact in the Latin American market, where banks are obliged to keep records of their communications, voicemail, chat, e-mail, mobile, Skype, etc. All this data has to be stored for at least five years and have the necessary mechanisms to be able to analyze it easily. Through Assurance Services, trading floors are monitored at any moment to avoid any irregularities. All that interaction or process is what we call compliance, which is an area that Wittel can cover with our solutions. We also have count a Financial Markets Network, a network dedicated to trading that allows our customers to connect with their counterparts and resources to enable high or low touch trading.  Today, IPC has 200 thousand users in the community and more than 70 liquidity resources such as trading platforms, world markets, rsvs, ECNs, etc.

What are the challenges?

V. Higuera: Wittel is one of our oldest partners (since 1994), they are well recognized in the region, and have an important customer base for IPC. Our philosophy is to have Channel Partners because local service is key; we will continue working together with Wittel to achieve greater penetration and continue to be No. 1.

M. Latorre: Wittel is No. 1 in Brazil, we want to replicate this experience in Chile. The adoption of trading floor solutions has a great penetration, especially in banking, but given the economic context the renewals of the platforms has been delayed, so there is a great opportunity both in renewals as in adding value to the customer, through solutions mentioned earlier and how they can be incorporated into the collaborative work environment that have, for example, traders. In addition, Wittel is one of the few IPC partners who operate in more than one country, allowing us to attend our strategic accounts that operate internationally.

By Robert Powell, Global Head of Compliance at IPC for Global Banking and Finance Review – first published July 25, 2017

With MiFID II implementation high on financial firms’ agendas, there is going to be a major change in the way that trading communications are recorded and stored. Both mobile and electronic trading communications have increased significantly over the last few years, which is reflected in the new rules that extend the scope of communication recording and surveillance to include all types of interactions, including text, IM, email, mobile, and social media.

Once these regulations have been enforced, financial firms will need to capture data from all their regulated users, whether they are involved in pre-, during and post-trade activities; and this includes communications from far beyond the trader’s turret. Now – with just months until MiFID II comes into force – any organisation which is implementing MiFID II or still needs to begin the process, should consider creating a checklist to achieve compliance with the new rules.

Here are seven steps firms should be considering in preparation for MiFID II:

1. Understand record retention regulations

First, it’s worth combining a few technical standards published by the European Securities and Markets Authority (ESMA)into the first checklist:

• Have a designated compliance officer/director/manager

The Financial Conduct Authority (FCA) has listed the following controlled function (CF) registration types that might be a suitable person: CF1 Director, CF2 Non-Executive Director, CF3 Chief Executive, CF4 Partner & CF29 Significant Management. This person should be heavily involved with creating written policy and the policy procedures along with testing the policies and procedures for effectiveness. They should also be the person who conducts the annual record keeping review.

• Know your estate

This should be relatively easy to achieve, but businesses need to focus on two fundamentals – who and what.

First, who needs to be recorded? As a start, this should include all traders and sales people, and anyone who has the potential to commit the firm or discusses any kind of transaction with clients or counterparties. This list needs to be validated by the business and compliance team, and should include how long they need to be recorded for.

Second, what communications methods should be permitted to be used and how should they be recorded? Starting with the easy and obvious: email, Bloomberg, Thomson Reuters and instant message will be the norm for most firms. By recording fixed line phone calls, mobile calls and text messages, approximately 95 percent of firms will be covered. Specialist tools like ICE Chat and Slack should also be addressed. For each system, organisations need to understand how they are recorded and retained. Businesses can consolidate recordings to a single archive reducing surveillance, recovery challenges and costs. For MiFID II purposes, record retention is critical. If a company is outsourcing, they should subject third-party suppliers to additional scrutiny that they may not have encountered before.

• Communications “intended to lead to a transaction”

Organisations may need to increase the “recorded population” if, for example, policy is used to prevent employees from taking client orders or making transactions on their personal devices. In this case, organisations will need to extend mobile recording to cover their calls and texts. Also, looking at internal calls will also be vital. This will likely be covered, but it’s worth raising it as a discussion item among business, compliance and IT departments to ensure full compliance with the new rules. 

2. Extend the retention period

The unification of the records retention period is the cornerstone of one of the new rules under MiFID II. Firms will be required to retain communications data for five years unless the local regulator requests retention for seven years. Most organisations already retain emails for at least five years, however it’s worth checking that all types of communications used are captured for the right period. Voice calls, fixed line and mobile, will be a different matter.

There are five key things to check:

• Find out how to extend a fixed-line recording retention period. It’s important to look at how the data is stored and if it is tamperproof or on WORM (write once, read many) storage.
• For mobile, are all users recorded? Additionally, where are these calls stored? If the calls and other data comes to an organisation’s on-premise infrastructure, they will need to check the retention period and make sure calls by new users are set to be retained for five years.
• Is the firm under litigation or regulator hold for deleting records? What is covered and can these holds be reviewed prior to MiFID II coming into effect?
• Are there different archives for different media types, and is now the time to look at a holistic archive that contains all communications records? And, will it allow management and retention periods, users, litigation holds, and search and recovery with centralised, accessible storage?
• US organisationsin business with European-based firms, may need to look to extend the voice recording retention periods per CFTC to include others that do these trades, even if they are not based in Europe. 

3. Have a plan in place to manage system failure

Next, systems fail. It is a fact that is widely recognised. When systems fail, organisations can find out more about their systems, procedures, technologists and partners than they would when business runs smoothly. MiFID II requires investigation of system failure. It’s not explicit, but an investigation of any failure should offer solutions and track the implementation of that solution.

In addition, organisations should try to formulate a list stating what was missed while the system was down. This way, when regulators call, organisations have proof that they prevented a recurrence of the problem; along with a good idea of the calls or messages that were not captured while the problem existed. Firms should keep their written investigation for five years, the same as capturing the original records.

4. Clarify what complete, quality and accurate means

It is very important to understand key terms at the beginning of an organisation’s journey to MiFID II compliance. When it comes to record retention,some argue that the requirement of “complete, quality and accurate” records is vague. Defining them can give a clear understanding of what the regulator expects.

Complete – this means organisations should know all types of communications used and by who, as well as having fit-for-purpose capture and retention mechanisms and processes in place.

Quality – this means the ability to reproduce records in as near original quality as possible. It applies to the ‘original form’ for electronic communications and for the actual voice quality for voice or video calls.

Accurate – this means organisations should be confident in not only the records’ content, but also the all-important meta data that shows when messages were sent or calls made.

5. Implement training programmes

There is a new emphasis on continuing compliance training for employees at financial firms. This is common with all new financial markets regulations where the regulator is keen to prevent employees claiming they were not aware of the changes and thought they were acting reasonably. At the very least, the training should protect the firm and show that it has complied with its obligations to inform its employees – and provide examples of – good and bad communications behaviour.

Recently, UK regulators have taken action for inappropriate use of WhatsApp. Training should be very clear about which communications devices are company approved to conduct business and that anything outside of these communications devices is strictly prohibited from using to transact. The allowed list is much shorter, while the unpermitted list grows every day, which means emphasis should be placed on informing users which communication channels are allowed or not.Indeed, employees should be aware of the risks of having a zero-evidence messaging system on their devices. Law enforcement may assume fire when they see this smoke.

6. Regulate non-recordable devices

It is very hard for firms to prevent the use of non-recordable devices. The training mentioned above, combined with a culture of compliance, will go a long way towards achieving peace of mind. The IT team should ensure the main, non-recorded communications capabilities are blocked from use on the network and mobile devices.

One item – often left until last – is the ability to link together all the hard work in creating and implementing policies for communications use, retention and surveillance. MiFID II requires management oversight, written policies and the ability to regularly review and show that implemented policies are effective and adhered to not just when organisations perform a recovery, conduct surveillance or add another communications technology.

7. Conduct surveillance

Surveillance is another difficult area in which to provide satisfactory documentation to regulators. It’s not possible to look at every message or listen to every phone call so technology selected to achieve this purpose should be adaptable and well understood by anyone using it. In addition to monitoring key words and phrases to reveal concerning behaviours, organisations should be thinking of surveillance that will uncover evidence of non-recorded use and confidentiality breaches. If found, these can be quickly remediated and used to demonstrate the programme’s effectiveness.

MiFID II compliance is going to turn a lot of organisational practices upside down, but by starting with management oversight, knowing and understanding your estate and communication methods, and addressing the extension of records retention, firms can be on the right track to meeting these regulations before they are implemented in January 2018.

By Walter Ferstand, Sales Compliance Subject Matter Expert at IPC for Traders – first published May 11, 2017

While talk of repealing the Dodd-Frank Act has been at the fore of regulatory rollbacks vowed by the new U.S. administration, in most financial industry circles the sentiment is that a wholesale dismissal of the regulation is unlikely.  And though parts of the legislation are being targeted – ostensibly to recalibrate bank lending thresholds and protections under the Consumer Financial Protection Bureau – for millions of regulated market participants, the ship has sailed regarding ethical guidelines, communications standards, record-keeping and data compliance.

The Dodd-Frank Act is often referenced as the post-2008 financial crisis law that, by defining dealer conduct standards, recordkeeping and reporting requirements and mandating trading on regulated exchanges, swap execution facilities and two-party transactions via clearinghouses, lowers risk and costs for businesses, consumers, and strengthens confidence in the market.  So what are financial firms and regulated participants to make of this repeal talk?  Even if changes were to include trading guidelines, for good reason, for most global financial firms it would (and should) be business as usual.

To better understand where we currently find ourselves with Dodd Frank it’s worth a brief visit through history of the financial markets and the different regulations that have been enacted.  Absent a Dodd-Frank Act and immediately following the 1929 stock market crash, to avoid a casino-like environment, boost market integrity and protect investors, the U.S. federal government enacted rules for compliance and mitigating risk through  a slew of then-new legislation such as the Glass Steagall Banking Act of 1933, which held that commercial banks were no longer allowed to underwrite or deal in securities, while investment banks were no longer allowed to have close connections to commercial banks. Further, the Securities Act ensured issuers selling securities to the general public disclosed material information to investors and that securities transactions are not based on fraudulent information or practices, while the Securities Exchange Act of 1934 directly regulated the markets on which securities are sold and their participants.  Lastly, the Investment Company Act of 1940 outlined investment company functions, structure, accounting recordkeeping, auditing requirements, transactions among affiliated persons and the redemption and repurchase of securities.

Fast-forward to 2010, the Dodd-Frank Act comprehensively reformed the regulation of swaps, which invariably helped accelerate the development of electronic trading within U.S. jurisdictions as we know it today.  As such, while the pace of regulatory progress has differed from asset class to asset class, a universally applicable consequence of this new market structure is an increased reliance on data and technology.1  For its part, the U.S. is shifting to shortened settlement cycles — as with the move this fall to trade plus two business days – and real-time surveillance, all of which further mitigate operational and system risk.  Organizations such as the Financial Industry Regulatory Authority (FINRA), National Futures Association (NFA) and the Commodity Futures Trading Commission continue to empower the financial markets to self-regulate and penalize member firms when they violate agreed-upon industry rules and regulations.  In yet another tightening of regulatory oversight, the CFTC moved surveillance functions such as monitoring for suspicious trading patterns that may indicate fraud or manipulation to the Division of Enforcement, while surveillance of trading activity for significant market developments and other information will remain with the Division of Market Oversight under a newly created market intelligence branch.2

Though regulation repeal is being bandied about within the highest levels of government, with regulators like the CFTC increasing its focus on market development and data analytics, financial firms in the U.S. and abroad know they must continue to enforce the long-standing regulations already in place.  What’s more, regulators outside the U.S. influence how financial firms are doing business globally. That’s one reason why evolving political climates and the prospect of a Dodd-Frank diminishment are not necessarily deterring compliance decisions for 85 percent of C-level financial firm executives, according to recent studies. To illustrate, U.S. firms that fail to keep up with global requirements for record-keeping under the European Union’s forthcoming MiFID II regulation, for example, would be at a disadvantage if called to defend themselves without the proper supporting data, and risk potentially incurring millions of dollars in fines and irreversible damage to their reputation.  Given this environment, it’s not surprising that financial firm leaders are most concerned about compliance culture and professional conduct concerns (89 percent), understanding rules and regulations (87.3 percent), and implementing new regulations (86.4 percent).

Repeals of financial regulations or aspects of Dodd-Frank may or may not be on the horizon.  In the meantime, as regulators become increasingly savvier on how to remain relevant and impactful in their oversight, surveillance happens instantaneously and regulation continues to increase. As a result, having a holistic approach to wrangling a financial firm’s data across every area of its business and automating that function will be critical. Whether doing so in order to comply with regional or global rules or be an ethical, transparent corporate citizen, an active overview of your firm’s compliance efforts is guaranteed to gain deeper insights into how your company communicates, discover efficiencies in how it operates and ultimately gain ground competitive ground in the marketplace.

By Tom McNeila, Senior Product Marketing Manager at IPC for Traders – first published May 1, 2017

Just as financial markets firms become more confident that they understand the implications to their business of Dodd-Frank and MiFID, here comes MiFID II and the General Data Protection Regulation (GDPR) expanding the number of regulations their organizations must adhere to and the number of employees affected by the regulatory requirements.

The growing portion of the workforce now considered ‘regulated users’ can pose a potential risk to profitability and reputation if these users do not follow company policies set up to meet all regulatory requirements. To address this challenge, the financial community is investing in technologies. In one recent IPC survey, more than 80% of firms stated their spending on compliance technologies has increased by more than 20% year over year.

The Role of Technology for the ‘Regulated User’

For ‘regulated users,’ education of company policy is essential, but investing in and implementing the right technology is the key component to ensuring both compliance and productivity.

Mobility is a prime example of where the need for productivity and compliance requirements intersect. Mobility offers the opportunity for productivity without the investment in infrastructure – for many a laptop and mobile phone are all that is needed. Whether it is entering new markets, establishing new geographies or offering the opportunity to be productive wherever or whenever needed, organizations need to offer their ‘regulated users’ mobility while simultaneously ensuring all regulatory requirements are met. However, mobility also offers the opportunity for behaviors that are not in line with company policy. The use of ‘zero-evidence’ applications that are outside an organization’s control is a common example of a behavior that has resulted in fines and loss of reputation for more than one financial institution.

To combat this type of behavior, organizations are unifying their communication elements under one platform. A single platform offers your ‘regulated users’ a single workflow over multiple endpoints, adding efficiency to their work processes. For the organization, this single platform ensures your ‘regulated users’ will adhere to company policies and ensures the proper recording and archiving of all communications. This achieves the balance organizations need for continued success.

It’s A Brave New World

This new ‘regulated user’ world will most likely be a thorn in the financial community’s side for as long as there are regulatory requirements, but those organizations that invest wisely and partner effectively can turn compliance requirements into a competitive advantage.