November 06, 2013

The US began its adventure with mobile recording regulations, courtesy of Dodd-Frank, in June of 2013. Six months later, on December 31 the regulations will extend its reach from swap dealers and participants to a number of other financial groups including futures and retail foreign exchange dealers. Are we prepared?

Recall in November of 2011 the UK became the first to mandate mobile recording, applied to any financial service group involved in giving advice that led to a transaction. As the US continues its roll out, it's interesting to compare technology and techniques considered near the deadlines.

[For more on mobile regulation see: Etrali Trading Solutions and EE Develop New Mobile Voice Recording Offering]

In the UK, firms had two ways of complying, explains Tim Furmidge, head of product management, financial technology services, at BT Financial Services. BT has experience offering recording solutions for fixed and mobile phones in the UK and global clients.

Firms could outright ban the use of mobile or they could implement technology to do the recording. The US currently has a third option; the ability to apply for an extension of the regulatory deadline, called an alternative compliance schedule. The combination of respondents is consistent with what happened in the UK rollout, says Furmidge.

Many of the firms that banned mobile have now accepted they are just holding back the tide. Firms that chose to implement recording technology largely did so on a basic level, complying with initial requirements and without too much thought about the continuum of regulations or the use of analytical tools.

In general, the UK firms that initially selected basic solutions are reassessing the situation and taking a longer term global view.

The US is following a similar, if not slightly more mature path. Dodd-Frank is forcing firms to concentrate, at the minimum, on basic recording, but many are thinking ahead to produce audit trails, perform anlaytics, and use data to provide information for both regulatory and internal purposes.

Spurring the technology maturity is the realization that even with Dodd-Frank extending its reach in the US, the regulations apply in other other parts of the world. "There's already more global aspects here than there there was in the UK and that's causing people to look at more long term responses," adds Furmidge.

Looking Ahead with Recording Technology

By now firms have come to a general agreement to bypass applications that conference in a recorder, they had proven to be too clunky, disruptive and costly. Instead, users will replace a SIM card they have in the cell phone with one from the mobile partners to trigger an automatic recording in the cloud, or redirected to their own systems.

"We had this experience in the UK," says Furmidge. "Initially it raised some concerns about security and access, but we were able to demonstrate to firms that the recordings were entirely encrypted and safe within cloud and specific areas so that it's accessible to appropriate customer only… Thanks to a combination of firms having to comply with regulation dates, and we were able to show solutions, firms have become comfortable with recordings stored in the cloud."

From BT's perspective, firms must be allowed to communicate and collaborate internally in a compliant way from any device. "Our goal is to enable clients to do that with range of solutions and managed service wrap around that. Issues going global, so the focus is really on basic recording at the moment but undoubtedly firms will turn to things suggested in Dodd-Frank, like recreating things in trade, and some of that is for firms as best practice as well as what regulations are asking for. Once the initial parts of basic recording are in place I think we will see audio trails and analytics and so on. Our strategy is provide building blocks to do that, as well as base line recording."

ABOUT THE AUTHOR
Before joining UBM Becca served as Editor-In-Chief at Kapitall Wire, the sister site to an online brokerage firm that combines the challenges of the stock market with the thrill of ...