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Investing for the Future: How UK Organisations Can Minimise Disruption Around MiFID II Recording and Surveillance

Investing for the Future: How UK Organisations Can Minimise Disruption Around MiFID II Recording and Surveillance 3

By Colum Gorman, Business Development Director at Content Guru

Investing for the Future: How UK Organisations Can Minimise Disruption Around MiFID II Recording and Surveillance 4

While it is uncertain as to whether the UK will decide to diverge from some parts of the Financial Instruments Directive II (MiFID II) post-Brexit, it is becoming clear that the UK will not remove itself from the articles that relate to Recording and Surveillance.

This is significant, given the ongoing pace of EU regulatory change. In fact, UK firms may find themselves subjected to even greater levels of scrutiny as a result of Brexit. Indeed, trading as a ‘Third Country’ within the EU means that the UK will now have to prove regulatory equivalence, and the complexity of this process is yet to be fully determined.

This poses an interesting upcoming challenge for organisations that want to assure long-term success, while maintaining a firm grip on their ongoing cost management.

With that in mind, the following five recommendations will help firms both future-proof existing communications recording and storage solution investments and circumvent the potential risk of encountering additional costs and disruption in the future.

  • Adopt a unified 360-degree approach to compliance

Forward thinking firms that adopt a holistic approach to communication recording and storage solutions will be better able to position themselves for competitive advantage.

Going beyond simply considering how to meet today’s compliance obligations, they should be looking to implement open architectures that will enable them to leverage powerful new enabling technologies, such as artificial intelligence (AI), that anticipate future regulatory developments.

In parallel, firms should also be looking to implement a unified approach to common requirements that will enable them to streamline compliance strategies across the business. Beginning, for example, with identifying the overlapping compliance obligations across MiFID, Dodd-Frank, EMIR and REMIT.

Finally, implementing cloud technology that utilises industry standards and supports organisational change will help ensure firms are capable of adapting with ease to the fast-evolving regulatory environment.

2          Deploy open architectures

Communications recording and analysis technology is advancing at a rapid rate and regulators and customers will expect firms to keep up with the latest innovations. This represents a singular challenge for any business that is trying to prepare to meet new compliance obligations, and especially so for those organisations that have invested heavily in proprietary solutions.

Typically, these proprietary or ‘closed architecture’ solutions use APIs that will only work with a specific vendor’s products or file formats and rely on communication protocols that are incompatible with third-party software. It is this so called ‘vendor lock-in’ that will prove troublesome for any organisation that wants to implement a cost-effective or competitive long-term compliance strategy.

By contrast, organisations that opt to deploy open systems will be free to take advantage of best-of-breed solutions, quickly integrating the latest innovations to confront any future extensions and adjustments coming down the line.

3          Limit audio compression

The emergence of new cutting-edge voice analysis technologies, powered by advances in Automatic Speech Recognition (ASR), are setting a new benchmark in analysis capability that looks set to become a standard compliance toolkit requirement across the industry.

As a consequence, firms must act now to ensure they can integrate ASR technology into their compliance solutions in the very near future. For many, this will mean rethinking audio data compression.

Many of the recording and data storage solutions in use today employ high audio compression algorithms that make audio files smaller by removing audio data from the file. While this type of compression is great for reducing file sizes, it reduces overall fidelity and can significantly increase transcription word-error rates. Furthermore, once compressed, this lost fidelity cannot be retrieved.

To take full advantage of ASR and other next-generation analysis technologies, organisations should instead look to deploy recording and storage solutions that use lossless formats. To improve transcription accuracy yet further, businesses can utilise stereo recording that allows both sides of the conversation to be separated – eliminating the transcription errors that can arise when individuals talk over one another.

As ASR performance continues to advance and new algorithms emerge that enable organisations to re-analyse existing recordings with increased transcription accuracy and analysis, organisations will need to ensure they’ve moved on from recorded audio compression techniques if they hope to take full advantages of the new opportunities these technology advancements open up.

4          Deploy high-capacity storage

To get a handle on compliance, firms are turning to compliance analytics and AI technologies to sift through large data sets and root out potential compliance violations, based on current and historical data.

Added to which, regulatory controls governing everything from best execution and reporting procedures to conducting monitoring and risk management means that firms are becoming increasingly reliant on data-heavy compliance strategies. To cope with this growing demand for comprehensive high-quality data, organisations will need to invest in robust high capacity storage solutions.

Similarly, organisations should ideally look to ensure their systems utilise compliant WORM (write once, read many) data storage with the capacity needed to retain large volumes of electronic communications data – including uncompressed stereo voice data – for the duration of any regulated time period.

5          Unified recording and analysis

Rather than working across multiple systems or utilising overlapping solutions that require multiple management policies, organisations should instead look to deploy a unified platform that will enable them to take full advantage of resources such as search-and-replay, e-discovery and end-to-end reconstruction.

Having the ability to do all this within a single system will enable firms to initiate truly cost-effective enterprise-wide compliance and data management policies and eliminate many of the problems so often associated with a disjointed approach.

Alongside being able to manage their assets and resources much more effectively, firms will be able to optimise value across the business and maximise the effectiveness of compliance officers who will be able to make best use of the time and resources that is now available to them.





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