Mobile phones and trading floors – are they mutually exclusive or can they co-exist in peaceful harmony?
That was the subject of a lively panel discussion featuring Paul Clulow-Phillips from Societe Generale, Helen Bevis from Steeleye, Sam Tyfield from Shoosmiths and Will Scott from Telstra, and moderated by Clive Posselt of The Realization Group, where industry leaders were brought together to share their challenges, insights and practical solutions.
Data capture – corporate versus personal
In the wake of a number of new regulations in recent years – in particular MiFID II, the Market Abuse Directive/Regulation (MAD/MAR) and the Senior Managers & Certification Regime (SMCR) – and the prospect of large fines for non-compliance (not to mention the damage that firms can suffer as a result of malpractice), regulated financial institutions are understandably nervous about ensuring that all relevant conversations are recorded and monitored.
This has led firms to implement a diverse range of policies around the use of mobile devices in the trading room. Some firms have banned their use altogether, others allow their staff to only use corporate-issued mobile phones, whereas others follow a ‘BYOD’ (bring your own device) approach, where software is installed on the device to ensure business conversations are captured.
However, it was clear from the discussion that there is little agreement on exactly what needs to be captured, and what doesn’t. People expressed concern about whether firms are collecting personal data or just corporate data. Helen Bevis, Head of Operations & Strategic Partnerships at Steeleye, remarked that there is not always a clear line between the two, and that there continues to be ambiguity. In particular, around ensuring that if an individual is using dual devices, there is a clear distinction about what is being captured on a corporate level, and what that actually entails.
Culture, conduct & ethics
Sam Tyfield, Partner with Shoosmiths, stressed the point that the FCA has no limit on what it wants to see captured, because it uses the captured data for various different purposes. If a conversation between two individuals, that is inappropriate in a work context, is captured, then the FCA will want to know that the firm recognises that it is an inappropriate conversation, and intends to do something about it, from a culture and conduct perspective. If people are having those kinds of conversations, then the FCA can interpret that as the firm having a lax attitude towards market abuse and manipulation.
Another important point that came up on the topic of data capture, was regarding the different layers of data that the firm captures about individuals’ movements and trading and non-trading activity. How much additional data do firms collect, how is this overlaid with trading conversations, and to what use is it being put?
Paul Clulow-Phillips, Managing Director and Global Head of Markets Compliance & Surveillance at Societe Generale, recognised that this is a core concern for people. Given what is possible and available to firms in terms of tracking movement and tracking activity, what is actually desirable from an ethical perspective? He emphasised the importance of the firm staying on the right side of ethics.
Part of the discussion centred around both the benefits and challenges associated with a BYOD approach. The point was raised that if an institution does not have to maintain a corporate mobile phone estate, then there can be a huge cost savings. Also it was argued that if the mobile phone is not owned by the firm, then the firm does not have a regulatory responsibility for everything on that device. But it was generally agreed that where firms do allow (or even encourage) the use of personal mobile devices, additional mobile device management technology should be put in place to mitigate any business risk
One of the risks discussed was cyber-security. Will Scott, EMEA Business Development Director at Telstra, reassured the panel and the audience that solutions such as Telstra MultiLine powered by Movius are highly secure. Companies need to realise that mobile devices must be protected in similar ways to any device that has access to corporate information to minimise the threat to the business. Combining applications like Telstra MultiLine and those with access to corporate systems (such as email and SharePoint etc.) with appropriate Mobile Device Management tools to create secure containers of corporate applications will ensure that users only get access if they are utilising the appropriate methods. Will pointed out that these can be implemented on both corporate and BYOD devices to ensure the treatment is no different irrespective of which device it is being accessed by.
Will also made the point that that the world is changing, and that restricting people completely from being able to use personal phones is not a sustainable model in the long term. He pointed out that clients are driving the communication channels with organisations, wanting to be able to ring people on their mobiles, send a text, or communicate via an instant messaging app.
One audience member expressed a concern that the regulators, or even clients, might have an expectation that what is a good solution for a larger bank should be implemented by all firms.
However, the panel agreed that there are many different technological solutions available, some of which are very scaleable, providing smaller firms with exactly the same capability on the monitoring and the surveillance side as much larger enterprise projects at top tier investment banks.
Will mentioned that that much of the new technology is person-based, rather than reliant on putting a huge system in place. So the new technology is available equally for the smaller firms as it is for the larger ones.
In summary, leveraging the power of mobile technologies, firms can increase productivity, enhance collaboration, improve customer experience, lower costs and gain a competitive edge without compromising security or compliance.
This event was sponsored by Telstra and hosted by The Realization Group as part of their “Fintech Influencers” series. To download the Financial Markets Insights report, “Taming the Mobile Beast – How can mobile devices and trading floors work together under MiFID II?”, please visit https://www.therealizationgroup.com/portfolio/taming-the-mobile-beast/