Which internal telephone conversations or electronic communications regarding the handling of orders and transactions need to be recorded?

Answer 1

Internal telephone conversations and electronic communications that "are intended to result in transactions" or "relate to" the reception and transmission of orders, execution of orders on behalf of clients and dealing on own account are subject to the MiFID II Article 16(7) recording requirement.

Recital 57 of MiFID II sets out that: "such records should ensure that there is evidence to prove the terms of any orders given by clients and its correspondence with transactions executed by the investment firms, as well as to detect any behaviour that may have relevance in terms of market abuse, including when firms deal on own account".

As an example, such records should include conversations or communications by which the sales desk will request a quote from the trading desk on a financial instrument before concluding a transaction with a client. It may also include conversations or communications that are within scope and made to or from the sales and research desks.

Therefore, ESMA expects firms to record all internal telephone calls or electronic communications regarding the handling of orders and transactions. However, ESMA would not ordinarily expect persons carrying on back-office functions to be captured by the requirements.