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Messaging apps in the spotlight


August 2022

Messaging apps like WhatsApp, Signal and Telegram are usually free to download and use. But their use among global banks for business dealings has resulted in regulatory violations and over USD$1 billion in U.S.-issued fines. Now, regulators are toughening their stance.

“Financial firms face an extra layer of complexity when it comes to collaborative communication tools,” says Maurisa Baumann, Head of Desktops & Feeds Products at ICE. “In addition to a messaging system that streamlines internal workflows, they’re also looking for a tool that enables efficient and transparent price discovery and meets record retention requirements”.

SEC and CFTC rules require banks and broker-dealers to maintain and preserve certain communications, as such records are a means of monitoring compliance with investor-protection laws. The use of messaging apps on personal devices grew across the finance sector during the pandemic, as traders and brokers sought to keep in contact with clients while working remotely.

The issue isn’t isolated to the big banks; asset managers are now scrutinizing their employees’ use of personal and social messaging apps, with reported probes from regulators1.

The recent events and increasing trends of regulatory scrutiny and oversight emphasize the need for a purpose-built messaging platform for the finance sector. “A messaging platform that was purpose-built for the financial services industry is critical for traders and risk managers,” continues Baumann. “In addition to having built-in functionality to help firms achieve compliance, a messaging system designed for the financial community has an inherent commitment to continue evolving to meet new regulatory standards.”

Six features your chat platform should have

While in-house compliance and security policies may vary between firms, the regulatory needs of marketplace participants include:

  1. An encrypted network - Technology where user-to-user interaction takes place across a highly secure, encrypted network is crucial to protecting sensitive financial and personal data.
  2. Record retention – To meet stringent compliance requirements, you’ll need a messaging system that includes record retention. Look for a system that integrates with third-party compliance vendors and archives fully searchable message logs.
  3. The right search filters – It’s helpful to be able to search records for all conversations related to a specific user, a specific contract, or a specified time frame.
  4. User permissions – The ability to offer different permissions to different users can help you manage risk across individual parties. For example, a messaging platform that allows you to offer mobile access to a broker or restrict the use of multi-party chat rooms can enhance supervisory oversight at your firm.
  5. Integration with existing infrastructure – A messaging system that was purpose-built for the financial community and offers customized compliance solutions is more likely to be able to integrate with your firm’s existing security infrastructure.
  6. Supports full financial workflow – A system designed specifically for the financial industry offers firms distinct benefits such as enhanced compliance, end-to-end support for the trading workflow, and, in some cases, “smart” logic that recognizes trade queries as they’re entered and helps the user access more detailed research and analytics (like charts, detailed quotes, etc.) through a single click.