New compliance requirements for FX sales departments – View from within

Yael Warman

“CIFs will be expected to require that their sales staff be certified and registered in the Public Register, whilst they must also ensure to receive a regular and specific training.” – Constantina Economidou, Compliance and AML Officer, Leverate

By Constantina Economidou, Compliance and AML Officer at Leverate in Cyprus.

Since the announcement of the establishment of MiFID II back in 2014, the FX industry in EU faced new challenging requirements. The Sales/marketing sector of Investment Firms (“IFs”) couldn’t remain unaffected and the time for their techniques to change seems to have come.

A few weeks ago, we received access to CySEC’s Circular on proposed changes in respect to sales units. What we have learned from it?

According to MiFID II guidelines, sales staff will be required to possess the necessary skills, knowledge and competence to fulfill their obligations along with the business ethics standards.

IFs will be expected to require that their sales staff be certified and registered in the Public Register, whilst they must also ensure to receive a regular and specific training.

The common practice of outsourcing the sales units within or outside the EU is about to change. The appointment of external bodies within the EU will only be possible if these are registered as Tied Agents.

In the case however, that these are located outside the EU, IFs will have to maintain own funds of an amount of no less than €1,000,000 to cover the risk on an ongoing basis.

In addition to these, sales staff will have to forget the very common practices of repeated and high pressured phone calls to clients and providing code-names for ensuring their anonymity.

Moving forward, they will have to provide full transparency and limit their activities only to the provision of information about the services, proposed investment strategies, technology or assistance to account openings.

The implementation of these requirements by IFs will definitely impose to them several additional costs and create a higher demand for compliance. In the view of this however, ESMA underlines that, IFs will significantly benefit by these since the quality of their services will increase and they will preserve their reputation and minimize the risks associated.

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