The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, more commonly referred to as the Dodd-Frank Act, is a US law regulating the financial industry. You can read more about the legislation in our post.
Dodd-Frank introduced extensive call record-keeping regulations that apply to almost every organisation within the financial services industry. All telephone calls across both fixed lines and cellular devices, must be recorded. These records must be uniformly time stamped with the date and time to the nearest minute, securely stored, and searchable in order to provide easy access for trade reconstruction. Recorded communications must be stored for the duration of the transaction, and for five years afterwards.
The Dodd-Frank Act legislates the monitoring of the, previously unregulated, swaps marketplace. A swap is a derivative contract involving the exchange of cash flows or liabilities from two financial instruments. Swaps, traditionally, have been arranged over the phone, which resulted in a lack of regulation. This new legislation aims to bring transparency to the marketplace.
With the goal of deterring illicit activity, the Commodity Futures Trading Commission (CFTC) set a rule in 2012 that requires registered futures brokers to record their telephone conversations across fixed lines and mobile. Firms that receive more than $5 million in gross revenues, trading in commodity interests such as swaps, must record phone calls that lead to the execution of futures or other commodity interests and store them for five years after the termination of the swap. These records must be tagged in order to be easily accessible in the event of an audit or dispute.
As it is impossible to tell which conversations will lead to a transaction, recording all calls will ensure compliance with this regulation. With on-premise systems, the cost of recording and storing calls in order to comply with the legislation can quickly mount. Upgrades, and the cost of additional storage, can add additional stress to financial services organisations. With a cloud-based solution, all calls can be recorded with no worries about running out of space. Storage is unrestricted and can scale alongside demand to ensure that all calls can be captured and stored for the length required by Dodd-Frank legislation. Cloud-based solutions are also managed by the provider, meaning there are no maintenance or upgrades to organise and prepare for.
The Dodd-Frank regulations mandate the use of write once read many (WORM) storage facilities, so that data can be securely archived for a long retention period and protected against alteration or erasure. Guidelines from the securities and exchange commission (SEC) require brokers or dealers to maintain electronic records of their communications that are digitally stored in a solution that does not allow for rewriting or erasing records for the entire retention period.
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