According to the public statement issued by ESMA on 20 March 2020 (ESMA35-43-2348), if, due to the COVID-19 outbreak, it becomes no longer possible for investment firms to record telephone conversations with clients in line with the requirements set out in MiFID II and the firm’s applicable policies, the firms will be required to adopt alternative arrangements to ensure full compliance with existing requirements. ESMA recognizes, however, that in exceptional circumstances, some scenarios may emerge where even such alternative requirements may not be practicable.

Under these exceptional scenarios, ESMA expects investment firms to develop other solutions to mitigate the risk related to the lack of recording. This could include the use of written minutes or notes of telephone conversations.  In such situations, investment firms ought to ensure ongoing monitoring and ex-post review of relevant orders and transactions.

ESMA expects firms to ensure that the above measures remain temporary and that the recording of telephone conversations in accordance with MiFID II requirements is restored as soon as possible.

ESMA does not refer in its statement to internal telephone conversations. However, it seems justified that waiving the recording obligation should also apply to conversations within the firm itself. Investment firms, in an extraordinary situation, will have similar difficulties to record conversations with clients as well as their own.

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