New FSA electronic recording rules

The FSA has issued new requirements for electronic communications to prevent market abuse

LONDON – The UK’s Financial Services Authority (FSA) has released new rules for the recording of telephone and email communications to detect and deter future UK market abuse.

The new requirements for electronic communications form part of the UK’s market abuse regime recently put under review by the FSA ahead of future European Union (EU) regulation later this year.

By March 2009, firms must record all electronic communication relating to client orders and the conclusion of transactions for equity, bond and derivatives markets. However, the retention period for recorded calls and communications has been reduced from three years to six months.

Mobile phone conversations are exempt from the new rules – although this will be reviewed in 18 months – and discretionary investment managers will not be required to record telephone conversations and electronic communications with firms that are subject to the requirements.

The changes are the results of an FSA cost-benefit analysis on the scope and practicality of requirements held after market correspondence suggested further action was needed following a consultation held last year.