EU MiFID II Art 16

Sets out the organisational requirements for investment firms covering a number of key operational areas. An overarching requirement is for a firm to establish adequate policies and procedures to ensure compliance by the firm and its staff with all obligations under MiFID.

Rule Overview

Jurisdiction: European Union

Regulator: ESMA

Topic: General Requirements

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The requirements cover:

  • Personal transactions by staff;
  • Prevention of conflicts of interest;
  • Approval of new financial instruments;
  • Continuity and regularity of services and activities;
  • Management of third parties providing critical services;
  • Internal control and risk management mechanism and procedures;
  • Recordkeeping; and
  • Safeguarding of client ownership rights.

Recordkeeping requirements

Records that are required to be kept include:

  • telephone conversations; and
  • electronic communications.

Records must be kept even where the communications do not result in the conclusion of a transaction or the actual execution of client orders.

Electronic communications covers a broad range of communication methods that include:

  • Emails;
  • Social media;
  • Tweets;
  • Text messaging;
  • Chats; and
  • Videos.

The retention period for the records is five or seven years if requested by a competent authority.

Article 16(2)
Establish policies and procedures to ensure compliance with Directive obligations
Article 16(3)
Maintain and operate effective organisational and administrative arrangements
Article 16(4)
Ensure continuity and regularity in performance
Article 16(5)
Avoid undue operational risk when relying on third parties for the provision of critical functions
Article 16(6)
Keep records of all services, activities and transactions
Article 16(7)
Record telephone and electronic communications
Article 16(8)
Safeguard financial instrument ownership rights of clients
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