Do the record keeping requirements set out in Article 16(7) of MiFID II apply only when, through a given channel, the execution and transmission of the order is allowed in addition to the reception and transmission of the order?

Answer 12

No.

ESMA considers that the content of Article 16(7) of MiFID II and the related Article 76 of the MiFID II Delegated Regulation does not support the narrow interpretation that telephone conversations and electronic communications should be recorded only when, through a given channel, the execution and transmission of the order is allowed in addition to the reception and transmission of the order.

The first subparagraph of Article 16(7) of MiFID states "Records shall include the recording of telephone conversations or electronic communications relating to, at least, transactions concluded when dealing on own account and the provision of client order services that relate to the reception, transmission and execution of client orders". The inclusion of language such as "relate to" points to a wider reading of the recording requirement.

This reading is also supported by the provision included in the second subparagraph of Article 16(7) of MiFID II which makes it clear that the conclusion of a transaction is not a prerequisite for the requirement to record relevant conversations or communications to apply.