Keeping traders trading from home
Global banks were hoping to keep their London trading floors open amid the worsening coronavirus pandemic, insisting traders are “key workers”. However, trading floors have now been cleared with employees working from home in isolation.
In response, the Financial Conduct Authority (FCA) has relaxed regulations on recording calls. But does this measure introduce more problems than it solves due to compliance complexities? I explore how trading firms set traders up for remote working success.
A background to remote working barriers
Whilst regulations differ globally, authorities in the UK, US and Hong Kong have long required trading floor phone calls to be recorded for certain activities.
The FCA demands UK financial institutions keep records of all trades and transactions related to certain types of business for at least six months. Recording calls and reporting trades are essential to the regulators’ ability to monitor the markets for abuse, such as insider trading. Requirements to record calls apply to companies that receive and execute client orders to buy or sell in the financial markets.
Each trading floor in a financial firm also has its own set of policies which staff must abide by. For instance, the trading floor manager must ensure that all trade-based calls are recorded and monitored. An often-used policy that still exists is to ban all mobile phones on the trading floor. To enforce this, mobile phones are often stored in lockers and traders are required to use turrets to host calls.
Working from home has simply not been an option for many staff at most of the large investment banks. Beyond call recording, most traders and salespeople need to sit together on a trading floor which is monitored in order to meet regulatory rules.
Traders have found themselves operating in a new world. Overnight. With the increasing seriousness of the coronavirus pandemic, traders are now required to work from home – if they can. In response, the FCA has eased its position on recording calls from home.
The FCA has said it accepts that some scenarios may emerge where taping calls may not be possible. Adding that it expects companies to “consider what steps they could take to mitigate outstanding risks if they are unable to comply with their obligations to record voice recordings.” If financial services companies are unable to record calls they are then expected to “come up with a plan to fix the problem”.
An unnecessary alternative
This temporary relaxation of rules feels like a quick fix. A decision made because – right now – it feels like there is no other option.
But why spend time updating the regulator and coming up with an alternative solution when one already exists? Trading firms have enough problems to solve without having to decipher call recording requirements.
Working from home may also become the new normal for traders for the foreseeable future. Why not get the appropriate systems in place which meet compliance needs, right now? Mobile voice recording technology already exists – including secure and reliable voice and SMS recording, easy to use conferencing and robust, accessible voicemail – which ensures traders can operate effectively from home whilst remaining compliant.
By Steve Haworth, CEO of TeleWare Group