The Financial Services Authority has proposed that banks and securities firms record all "relevant" cell phone calls and store them for six months. "'Relevant communications' refer to voice conversations and other electronic communications that involve the receipt of client orders and negotiating, agreeing and arranging transactions in the equity, bond and financial and commodity derivatives markets," according to the FSA. The agency also wants to require firms to prevent employees or contractors from using private communication equipment (which may not be recorded due to privacy laws) to make such communications.
In March 2008, the FSA published rules on recording voice conversations and electronic communications that took effect March 2009. The bank regulator sought a means of obtaining evidence to monitor, investigate and prosecute market abuse cases. Mobile phones and mobile communications (except emails) were excluded from the rules, based on concerns that the technology to capture these communications was insufficiently developed.
However, the regulator has been reviewing this exclusion and says it has met with technology suppliers, trade associations and economic consultants to test the feasibility, from a technology and cost perspective, of applying a taping requirement to mobile phones. It has issued a Consultation Paper that seeks feedback on a proposal to remove the exemption for relevant communications (except emails) "made with, sent from or received on a mobile telephone or other mobile handheld electronic communication device." The FSA expects the rule would not be altered until Q4 2010, and then banks would be given a year to comply.
The regulator estimates that the rule, if enacted, would cover 16,000 mobile phones and would cost financial services firms around $17 million in the first year, and 27 million per year after that.