Compliance Is An Issue For Remote Trading And Investing Firms

Working from homepresents technological, confidentiality and cybersecurity challenges, particularly for the finance sector.

COVID-19 forced millions of workers globally to work remotely. However, working from home, or teleworking, presents many technological, confidentiality and cybersecurity challenges. In the financial sector, trading and other investment firms will need to remain compliant while operating via digital platforms. While maintaining strict compliance regulations for traders, the US Financial Industry Regulatory Authority (FINRA), the self-regulatory agency that oversees brokers, announced that traders could work remotely, given changing global realities.

A global pandemic isn’t the only driver of “remote compliance.” In recent years, financial companies have shifted back-office operations to other locations in order to maximize economic efficiencies and mitigate potential risks, such as natural disasters and terrorist acts.

But if trading and investment firms are to remain compliant during these difficult times, they need to compel employees to keep professional conversations confidential outside the office and shred any sensitive documents if they are no longer needed while adhering to the usual policies for books and records.

Leaving office spaces vacant for an extended period is an additional compliance risk, as employees may have left sensitive information and documents behind on their desks. With companies dependent on technology more than ever before, keeping all systems cyber protected is critical.

In addition, firms should test their business continuity plans to ensure operations without any disruption, including the ability of critical third-party service providers to function as normal.

Leading regulatory oversight authorities like the UK’s Financial Conduct Authority (FCA) have called on firms to “take all reasonable steps to meet the regulatory obligations, which are in place to protect consumers and maintain market integrity.”

General compliance requirements, such as recording phone conversations or providing regulatory data, could be challenging in times of remote trading or crisis. Understanding the new reality many companies face, the FCA announced that in cases where firms experience difficulties in submitting regulatory data during this period, they should keep appropriate records and submit the data as soon as possible.

The FCA says firms should implement enhanced monitoring or retrospective review once the current situation has been resolved, which could be some months away.