Regulations

The General Data Protection Regulation is an EU regulation that went into effect in May 2018. The regulation focuses on data protection and aims to bring all the EU member states under one umbrella by enforcing a single data protection law. All firms operating in the EU, wherever they are based,  are subject to GDPR and are considered Data Controllers.

Capturing and storing eComms means that firms are also capturing personal data such as addresses, contact details, cookie ID’s, or even trade-related data. Data Subjects, or your EU customers, are entitled to access the data stored about them and have the right to “be forgotten”. This implies the need for an enterprise eComms system in place to help proactively manage the eComm data and allow you to easily get access to all potentially relevant data, classify the private vs. the business-related and gain control and oversight. This is where Shield comes in.

MiFID II took effect on the 3^rd of January, 2018. In essence, MiFID II imposes higher reporting requirements and tests with a goal of increased transparency and market integrity. A comprehensive electronic communications record-keeping requirements are in scope for all investment based activity.

The Shield platform is designed to help with several requirements relating to communications and trade in an agile, cost-effective and productive way. The platform easily connects to relevant structured and unstructured data sources and stores all original files in the data vault. This allows compliance officers to manage and perform investigations across all platforms using one single interface and meeting the Record-Keeping requirement.

Best Execution requirement demands that the trader/organization must provide the best possible result for their clients for executing orders and trades. This also requires the firm to report any transaction and make the details of each one available to the public. This poses a huge challenge for monitoring and reporting eComm performed trade or activity and any other trade/ RFQ involving unsecured communication like voice, SMS, WhatsApp, email, etc. Shield connects automatically to all relevant channels for extracting Best Execution evidence and helps with the trade reconstruction needs.

The EU Market Abuse Regulation came into effect in July 2016. It aims to allow better market integrity and better protect investors. The NCA’s and ESMA (and Financial Conduct Authority (FCA)) wanted the regulation to also “enhance the attractiveness of the securities markets for capital raising”. We believe that any insider dealing, inside information based trades and market manipulation, will be orchestrated through eComms channels. That is why Shield uses Natural Language Processing and our proprietary Financial Context Recognition (FCR) engine to create an alert based on any conversation that might lead to a deal that breaches the MAR requirements and puts your organization at risk.

While this is a regime and not a regulation, the Senior Managers and Certification Regime aims to encourage a culture of staff taking personal responsibility and making sure firms meet a certain standard of business and personal conduct expected by financial firms. The Regime applies to regulated firms by the FCA.

Shield’s solutions enable the senior manager to have complete control and oversight over the communications in their organization. This allows them the ability to better keep the level expected by the SM&CR. Using Shield’s Proactive Surveillance modules will also allow the detection of possible breaches even before they occur.

The Dodd-Frank Act is a US federal law enacted in July 2010 following the 2008 crisis. The act has several principal rules including the Volcker Rule that limits commercial banks from engaging in speculative activities and proprietary trading for profit. The CFPB was created as an independent financial regulator to oversee consumer finance markets, including mortgages, student loans, and credit cards. New standards for the amount and type of capital that banks and other depository institutions must have to protect against their exposures. Establishing the FSOC to identify and monitor risks to the financial system. The act touched on Derivatives Regulation and Too Big to Fail and Living Wills principals.

Connecting to the trading systems already installed in a bank and connecting it with the communication platform allows the organization to meet the requirements under Dodd-Frank.

Shield is a cross-regulation future-proof platform. That means that it will help with future regulatory requirements. The ePrivacy Regulation focuses on the specific use of electronic communication such as email, SMS, cookies, and device fingerprinting as well as the integrity of the information itself. In that sense, the ePrivacy regulation is an enhancement of the GDPR since it covers the use of personal data as regulated under GDPR in the form of electronic communication like an email. Hence, companies need to comply with both sets of regulations if they are to use these forms of communication.

Finra’s 17A-4 LLC highlights a few topics. It requires written, enforceable retention policies; Insists on searchable index of all data; Data must be viewable and readily retrievable; Data must be stored offsite; Storage of data on WORM (write once read many) electronic media; Designation of a third-party consultant (D3P) and filing of required letters of notification and representation.

Shield flexible storage modules can help with Finra’s various requirements including FINRA 2210; FINRA 3110; FINRA 4511 and many others.

The U.S Commodity Futures Trading Commission has several regulations regarding electronic communication, how they are handled, kept and produced upon request. Those requirements are related to the clients and subscribers of the advisors. The regulations require efficient data management and hold responsibility for the advisors even if they are using third-party recordkeepers.

Shield’s RecordKeeping solution collects structured and unstructured data (voice, eComms, trade, market data and more) and allows Reconciliation of data, advanced search capabilities, and a proprietary Financial Context Recognition engine.

The Benchmarks Regulation has been enforced since January 2018. The regulation aims to manage conflict of interest in some investment processes. Prevent regulated entities from using unregulated benchmarks and improve governance and control.

As part of the requirements, record keeping and the need to prove BMR compliant upon request, across all means of communications, is essential and requires an eComms compliance platform to enhance it. Shield’s solution covers the various requirements under BMR.

The Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) was adopted in the European Union in 2011 to support open and fair competition in the European wholesale energy markets. REMIT is designed to increase the stability and transparency of the European energy markets by introducing prohibition and reporting standards relating to insider trading, market manipulation, insider information and trade reporting.

All participants and actors in the energy markets are encouraged to report suspected or potential breaches of REMIT that they encounter during their daily work or just as a market observer.

Shield surveils all eComms to detect behavior and talk within a company that may indicate suspicious or possible breaches of REMIT and can save the company aggravation of investigations, reputational risks and financial costs incurred by breaches