The Evolution of Mobile Device Recording
The advent of the telephone nearly 150 years ago, followed by the rapid creation of local, national and then international telephone networks, put an end to the use of the telegraph in trading of financial products fairly swiftly. But it was not long before traders grew frustrated with exchange- based telephone services – due to unanswered calls and busy lines, never mind having to remember and dial numbers – and the telcos were able to create a new market in “private wires” – originally a twisted pair from the traders desk connected directly to their counterpart via a patch panel at the local telephone exchange.
Pretty soon these private wire networks were carrying a large proportion of national and international trading in foreign exchange, commodities and securities. But there was always the issue of disputes – in price, size and direction of trades – so in order to manage these situations all the major firms started recording all of the calls on these private wire networks, so that when there was a dispute the relevant recording could be traced, listened to and the dispute could be resolved.
As international markets opened up and evolved in the 1980s, and the process of electronification began, new regulations – and regulators to police them – were needed to bring some order to growing and increasingly open markets. It was not long before the regulators realised that by accessing the recordings of private wires (which under the new regulations they were entitled to do) they could investigate all different sorts of market abuse.
The situation evolved further with the advent of the mobile ‘phone which was first welcomed for trading purposes and then banned from the trading floor to try and prevent unfettered market abuse. The arrival of hybrid internet and mobile non-voice communications (e-mail, SMS, MMS, iMessage, social media) coupled with the trading firms desire to reduce the management overhead of providing mobile ‘phones for employees by implementing BYOD policies, meant that this whole area of mobile communications could no longer be ignored.
Regulations governing mobile device recording have evolved globally, with differing timelines and substantial nuances but the generic features of these differing regulations can be characterised as follows:
Employers are faced with three choices.
Provide mobile devices to applicable staff and then lock-down, manage and police those devices at the same time as prohibiting those employees from using and personal mobile device for business purposes.
It is no great surprise that many employers are selecting the third option as the most cost-effective, easy to manage and pragmatic solution.
From the regulators’ point of view (again bearing in mind the differing timelines and variations between the different regulators objectives and overriding principles) some common themes have begun to emerge:
It’s clear that, in many jurisdictions, the regulators already in “firm touch” mode. For those that aren’t, it won’t be long.
Director: UK and EMEA
He can be reached at hugh dot cumberland at txtsmarter dot com