JWG-IT highlights Mifid record-keeping risks

Mifid think tank unearths gaps in record-keeping that need urgent attention

LONDON – In a new white paper, Mifid record-keeping: raising the heat, think thank JWG-IT has found gaps in infrastructure concerning record-keeping requirements under the Markets in Financial Instruments Directive (Mifid), which financial institutions will need to plug before the November 1 implementation deadline.

The research, which surveyed 70 financial services firms in 10 jurisdictions, found that 64% of investment firms still have significant work to do to be ready for Mifid’s record-keeping requirements. Record-keeping is one of the most important aspects of Mifid. It requires firms to store, and be able to retrieve and report, structured and unstructured data in the context in which it was created. A seminar held in conjunction with the Investment Banking Records Management Forum on September 20 confirmed that key risks will require big upgrades, not only in the way that records are captured, but also in how they are stored, linked and accessed at the required time. If a firm gets the report to the regulators wrong, it is potentially exposed to market abuse issues. “Mifid introduces new detailed rules and operational sloppiness will now cost you,” says PJ Di Giammarino, chief executive and founder of JWG-IT. “If what you have given to the regulators, the market and your customer does not match for up to five years from November 1, you are exposing yourself to hundreds of thousands of euros in penalties.”

To help meet the requirements, JWG-IT recommends that organisations that do not have a strong record-keeping capability appoint a senior records manager to take responsibility for this enterprise-wide project without delay.

The JWG-IT TechSIG has helped develop 10 key record-keeping scenarios, reference issues and architectures that can be used to assess the readiness of a firm’s record-keeping model. “In a JWG-IT breakfast briefing roundtable today, it was clear that, while more senior management are aware of the need for record-keeping change, it has not yet moved to the top of the to-do list. That said, there is pressure building as those who have invested in data management infrastructure are aiming for competitive advantage by offering superior services,” says Nigel Woodward, Intel and TechSIG chair.

Ivan Fernandez, head of the Global Industries Group for the FS vertical at EMC and the TechSIG storage and retrieval workstream leader, says: “It is now up to each firm to define its operational targets and steer its course to where it would like to be when the customer or regulator calls. TechSIG suppliers understand there is no magic bullet, and are working with JWG-IT and leading investment firms to benchmark their position and establish appropriate courses of action.”