MAR 3.6 Taping

1. (1)

   This section MAR 3.6 provides guidance on the interpretation of the Principles, and in particular Principle 3 (Management and control), as they apply to the capture of certain transactional information and other matters. MAR 3.6 applies only to inter-professional business and there are other requirements in the Handbook which relate to record-keeping requirements.

2. (2)

   MAR 3.6 also provides additional guidance on the record-keeping requirements of SYSC 3.2.20 R (Records).

MAR 3.6 does not apply:

1. (1)

   to a firm acting in the course of carrying on the regulated activity of establishing, operating or windingupa collective investment scheme; or

2. (2)

   to an insurer; or

3. (3)

   in respect of a transaction if the firm is subject to record-keeping requirements in COB for that transaction.

A firm should implement appropriate systems and controls with a view to ensuring that the material terms of all transactions to which it is a party, and other material information about such transactions, are promptly and accurately recorded in its books or records. The manner in which this information may be recorded include:

1. (1)

   voice recordings of transactions;

2. (2)

   voice recordings of oral confirmations;

3. (3)

   written trading logs or blotters; and

4. (4)

   automated electronic records.

A firm acting as an arranger (or name-passing broker) need record only those terms that are necessary for the transaction to be identified in its records or that are otherwise relevant to its role as arranger (or name passing broker). For example, it would not normally know the payment and settlement instructions.

A firm should be able to access all records as promptly as necessary. Records should be kept in comprehensible form or should be capable of being promptly so reproduced. The firm should make and implement appropriate procedures to avoid unauthorised alteration of its records.

If the records identified in MAR 3.6.3 G are substituted by written or electronic confirmations produced in accordance with SYSC 3.2.20 R (Records), then that confirmation may be an adequate record of the transaction.

If a transaction is agreed or arranged through an electronic trading, matching and order-routing system, then the records provided by that system may be an adequate record of the transaction.

A firm should keep under review whether, and to what extent, to make and retain voice recordings of its front and back office telephone lines used for negotiating, agreeing, arranging and confirming transactions and for the passing of payment instructions. (See also MAR 3.6.10 G.)

If a firm undertakes oral confirmations of the transactions it executes or brings about, voice recordings of these conversations can constitute an adequate record of that confirmation.

In undertaking a review under MAR 3.6.8 G, it is likely to be a relevant factor that voice recordings:

1. (1)

   provide an immediate record of all transactions and therefore may assist firms in resolving any disputes;

2. (2)

   may assist a firm to identify whether any personnel of the firm or of its market counterparty are involved in inappropriate behaviour; market counterparties may take comfort in knowing that their transactions are immediately recorded and that this provides evidence that can be relied upon; and

3. (3)

   can provide evidence of the rationale for a particular trading strategy or other aspects of inter-professional business and thereby provide protection to the firm.

A firm should make and implement policies on the length of time it keeps tapes. The FSA does not expect tapes to be kept for the full period required by the general record-keeping requirement, except where a firm relies upon voice recordings to comply with record-keeping requirements, in which case it should retain those recordings in accordance with the relevant requirements. One factor in setting that policy may be the use of tapes to assist the firm in resolving any disputes with market counterparties.