1.6) Recording of Telephone Conversations and Electronic Communications

Question 1

How does the FCA detect and deter inappropriate behaviour?

Answer 1

• Good quality voice recordings

- and electronic communications

Question 2

What kind of communications certain firms need to record?

Answer 2

• Telephone conversations and other electronic communications linked to taking client orders and dealing in financial instruments for a period of six month’s

Question 3

How are these communications held?

Answer 3

• These communications must also be held in a medium which allows storage of the information in a way accessible for future reference by the FCA

Question 4

When do these rules apply?

Answer 4

• The rules apply with respect to a firms activities carried out from an establishment maintained by the firm in the UK

Question 5

The rules on the recording of voice conversations and electronic communications apply to a firm which carries out any of the following activities:

Answer 5

• receiving client orders
• executing client orders
• arranging for client orders to be executed
• carrying out transactions on behalf of the firm, or another person in the firms group, and which are part of the firms trading activities
• executing orders which result from decisions by the firm to deal on behalf of its client
• placing orders with other entities for execution that result from decisions by the firm to deal on behalf of its client

Question 6

The rules apply to the extent that the activities relate to:

Answer 6

• financial instruments admitted to trading on a trading venue (regulated market, multilateral trading facility (MTF) or an organised trading facility (OTF)
• financial instruments in respect of which a request for admission to trading on a trading venue has been made, and
• investments which are related to such financial instruments

Question 7

Who do the new rules not apply to?

Answer 7

• activities carried out between operators, or between operators and depositaries, of the same CIS
• corporate finance business
• corporate treasury functions

Question 8

The rules do not include:

Answer 8

• conversations or communications made be investment analysts, retail advisers
• or persons carrying on back office functions
• general conversations or communications about market conditions

Question 9

Privately owned equipment

Answer 9

• a firm must take reasonable steps to prevent an employee from making or receiving calls on privately owned equipment that the firm cannot record or copy

Question 10

Recordings

Answer 10

Recordings must be kept for at least five years from the date they were made in a medium that:

• allows the FCA to have ready access
• allows for corrections/amendments to be identifiable
• otherwise cannot be manipulated or altered

(The FCA can specify an additional two years for specific calls, such as where it is conducting an investigation)