After spending the last seven years in development, the Markets in Financial Instruments Directive II (MiFID II) is finally here. Having come into force on the 3rd January 2018, MiFID II impacts the stock, bond, commodity and derivative markets, and anyone who works, trades or invests in them across the whole of the European Union (EU).
The aim of MiFID II is to protect investors and make sure financial markets operate in the fairest and most transparent way possible. This transparency gives regulators greater insight into what’s happening on trading floors and sales desks across the EU, making it easier to monitor for irregularities and identify market abuses early.
But despite the huge impact MiFID II has on the financial industry, many companies have been lax with their preparations for. Indeed, 39 percent of UK financial organisations don’t know whether they comply with the regulation. Their ignorance could cost them up to five million Euros or ten percent of annual turnover.
Companies achieve compliance through the cloud
Historically, financial services firms have been wary about using cloud technology, citing security and compliance concerns.
But that was yesterday.
Cloud providers have developed their products to a point where they’re now suitable for use in the financial sector. In fact, the cloud is arguably now the best path to MiFID II compliance.
In November 2015, the Financial Conduct Authority (FCA) declared that there are ‘no reasons why cloud technology should not be implemented should appropriate safeguards be in place.’ It went on to say that cloud technology ‘can facilitate entry and/or expansion, and increase the ability of financial services providers overall, to renew their IT systems in a more efficient manner.’
With this in mind, here are four ways that cloud technology can help you tame MiFID II.
1. Record and recall any communication
MiFID II requires that ‘anyone involved in the advice chain’ should keep records of all communications. That means you need to record and archive emails, telephone calls, video conferencing and more. With the cloud, you can easily archive all of this and, when necessary, find this information.
This allows for greater transparency, providing you and your customers (and your regulators) the protection of knowing that everything is fair and accounted for.
2. Store data more easily
One of the biggest hurdles facing financial organisations is that their storage requirements have skyrocketed. Your business must store 60, instead of six, months’ worth of data on each trade.
With cloud storage, you can easily scale your requirements to your demand. This saves you the hassle of making room for extra physical servers in your premises or the expensive risk of over- or under-provisioning hardware purchases.
3. Secure both company and personal devices
With the advent of cloud technology has come the rise of the mobile workforce. People expect to be able to work in the office, from home and on the go. Cloud technology ensures that employees can access all relevant information across devices securely, maintaining the transparency MiFID II requires, with information at your fingertips.
4. Reduce the cost of compliance
It has been reported that the average medium-sized UK wealth manager was spending £3-5 million getting ready for MiFID II.
Cloud technology can reduce this bill. As costs are related to usage, you only ever pay for what you need. What’s more, upgrading is faster and easier than with physical legacy systems. Simply put, you can reach the ‘cutting edge’ for a lot less with the cloud.
Compliance complaints? Silence them with the cloud
As we’ve said, MiFID II has been in play since 3 January 2018. If you’re not already complaint, you need to do something about it – and fast. But beyond the basic requirement for compliance, all financial services firms face a long-haul need to store, backup, archive and organise all the information related to compliance.
MiFID II compliance is at the beginning of a marathon, not the end of a sprint and cloud technology can help you reach the finish line.
If you’d like to learn more about how the cloud can simplify compliance, get in touch with us today.