On 20 March 2020, the European Securities and Markets Authority (ESMA) issued a public statement aimed at clarifying issues regarding the application by firms of the MiFID II requirements on the recording of telephone conversations.
In the public statement ESMA:
- reminds firms that it has issued numerous Q&As to assist firms in the application of the requirements – see ESMA Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics (Ref: ESMA35-43-349);
- recognises that there may be exceptional circumstances created by the COVID-19 outbreak, that mean that notwithstanding the steps taken by a firm, the recording of relevant conversations may not be practicable;
- if, under these exceptional scenarios, firms are unable to record voice communications, ESMA expects them to consider what alternative steps they could take to mitigate the risks related to the lack of recording. This could include the use of written minutes or notes of telephone conversations when providing services to clients, subject to prior information being provided to the client of the impossibility to record the call and that written minutes or notes of the call will be taken instead. In these scenarios, firms should also ensure enhanced monitoring and ex-post review of relevant orders and transactions; and
- expects firms to deploy all possible efforts to ensure that the above measures remain temporary and that recording of telephone conversations is restored as soon as possible.