The Dodd-Frank Wall Street Reform and Consumer Protection Act (known as the Dodd-Frank Act or DFA) was passed to promote financial stability by improving accountability and transparency amongst financial service organizations.
Dodd-Frank introduced extensive record-keeping regulations that significantly changed the requirements for federal financial regulatory agencies and almost all companies in the financial market industry. Dodd-Frank includes regulations that affect a wide range of financial service organizations, with the regulations pertinent to Compliance Recording among the most stringent and important.
According to former Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler, "The goal of the law is to:
- Bring public market transparency and the benefits of competition to the swaps marketplace;
- Protect against Wall Street’s risks by bringing standardized swaps into centralized clearing; and
- Ensure that swap dealers and major swap participants are specifically regulated for their swap activity.”
The key legislative requirements of Dodd-Frank relevant to Communication Recording are:
- All communications relating to pre-execution trade information must be recorded completely and accurately, including telephone, voicemail, instant messaging, chats, email, and mobile
- Records need to be uniformly time stamped
- A record of the date and time, to the nearest minute, must be on every record
- Trading records need to be identifiable and searchable by transaction
- All records must be maintained in a manner that is easily searchable
- Records must be available for trade reconstruction
- All records must be stored securely and readily accessible
- Records need to be stored at the principle place of business or such other principle office
- Records must be kept throughout the duration of the transaction, and then retained for up to five years
- Within the first two years, these records must be readily accessible
These regulations and requirements can be overwhelming and difficult to interpret and yet, it is crucial for financial service institutions to implement or update their Communication Recording technology to ensure compliance. This is especially true as communication channels continue to increase in number and technological complexity.
“The Wall Street reform bill will – for the first time – bring comprehensive regulation to the swaps marketplace. Swap dealers will be subject to robust oversight. Standardized derivatives will be required to trade on open platforms and be submitted for clearing to central counterparties. The Commission looks forward to implementing the Dodd-Frank bill to lower risk, promote transparency and protect the American public.” - Former CFTC Chairman Gary Gensler
Tags: Compliance Dodd-Frank Act Financial Compliance