The financial industry is on the fast track to an innovation reformation. Organizations have been implementing technological advances like instant messaging (IM) into their operations and day-to-day activities, meaning federal regulators have been quick to set rules to match these changes.
One of the most monumental advancements in finance is IM. In the same way that messaging has more fully connected the modern world as a whole, it has introduced an abundance of developments to the industry. Staff within an organization can have conversations instantaneously, regardless of where they’re located – which has only accelerated amid the cultural shift towards increased working from home – and teams can reach out to and keep up with clients over their preferred platform.
The IM Boom(berg)
One platform that has become ubiquitous in financial circles is Instant Bloomberg (IB), also referred to as Bloomberg Chat. It is a feature of the Bloomberg Terminal, which is a hub for financial information related to market trends, latest news, and analytics.
Bloomberg has a number of messaging options within its Terminal, including Bloomberg Mail and external mail, which allow users to connect with other financial professionals within the market and send information to client applications. These chat functions can be used on a computer and through mobile devices with the Bloomberg Professional App.
As reported by Bloomberg in 2022, the Terminal has more than 350,000 users, making it an indispensable tool among financial institutions, who have employed it to maximize the ability to retrieve and utilize pertinent financial data and news.
Ways to deal with communications compliance challenges of IB
While IM platforms have streamlined business communications, their presence also opens the door to risk. Undoubtedly, the ability to connect in real-time with coworkers overseas or potential new clients over IM applications like Bloomberg’s is tremendously advantageous. Nevertheless, security is always an essential factor – especially in finance, which is a nucleus for sensitive information.
So, how can organizations create strategies and implement policies at their organization to educate staff about proper messaging use and record retention? Equally as important, how do they observe communications to make sure that employees are following guidelines?
Creating distinct and accessible policies that employees can review is a first step that can often be overlooked. These policies should be clear-cut, detailed guidelines stating expected behavior to leave no room for confusion, such as how to use relevant IB features, explanations on the importance of appropriate behavior, and details surrounding communications record retention.
Organizations must hold training on how to use applications, and a summary of this information should be obtainable at all times. New hire training is critical, though refresher training for existing employees is just as valuable, as even seasoned staff can find themselves in regulatory crosshairs. Additionally, have compliance teams available to mitigate concerns and answer questions should any arise.
Policies should include recordkeeping requirement steps, as well as information explaining the need for effective archiving and data retention. Of course, having an archive is the essence of all compliance. Storing documentation and conversations in a secure, instantly accessible location means organizations can rest easy knowing their information is protected.
Data privacy, especially within communications, is hugely important. Considering the vast amount of personal information that is relayed over messaging channels, building a defense against hackers and bad actors is vital in legal compliance and maintaining trust. Ask yourself, how can clients be completely comfortable if they are unsure whether or not an organization is doing everything necessary to guard their information? SEC Commissioner Jaime Lizárraga said in a statement:
“Cyberattacks and data breaches can have devastating impacts on companies and their customers and undermine investor and market confidence. In the last decade, cyberattacks of all sizes have resulted in hundreds of millions of records stolen and billions in damages to victims.”
Organization is consistently important, especially when it applies to IM access and team structure. Sorting through and noting each team’s IB access level will help understand the ways employees use messaging platforms, and appointing compliance officers to perform IM analysis and surveillance of chats will catch any suspicious activity before it can develop into something more sinister. As noted by Peter B. Driscoll, Director of the Office of Compliance Inspections and Examinations, compliance teams and officers are “critical to the protection of investors.”
Follow the leader for compliant communications
As established, communication is important – but not just communication between teams or with clients. Arguably the most imperative is communication from executives and leaders. Though it is evident why businesses need to monitor communications, it is still important to be clear with employees and sustain transparency to promote a positive working environment.
Considering that Bloomberg’s messaging features can be accessed on mobile devices, it can lead to tricky conversations around using personal devices inside and outside of the office to ensure compliance (or engaging a compliant communications solution with a clear delineation between personal and private chats). Hence, helping employees understand the significance of communications surveillance is a step compliance teams at financial organizations must master.
Further, leading by example will do the most to encourage appropriate use of IM applications. As Associate Director of the SEC’s Division of Enforcement, Mark Cave, emphasized in a press release on a financial company’s CEO misleading investors, “senior executives of public companies hold positions of trust.” If leaders are engaging in misconduct, it will condone noncompliance amongst staff, as they will likely not take procedures seriously either. On the contrary, when employees see that their leadership team is exemplifying all aspects of compliance, they are more likely to imitate that behavior.
Don’t get stuck at the Terminal
As with the other messaging applications firms are employing, such as Microsoft Teams and WhatsApp, creating policies and guidelines around appropriate use exponentially improves an organization’s ability to safeguard data. The repeated enforcements against various organizations violating recordkeeping requirements illustrates that policies matter.
Failure to ensure compliant utilization of these IM tools means that organizations can fall into hot water. Noncompliant use can result in the loss of essential business communications, leaving regulators questioning whether that missing information could have been critical to investigations. Yet, as we’ve seen in headlines and through regulatory commentary, there is no question that regulators have a “zero-tolerance” stance on being uncooperative with requirements and will not hesitate to take action through hefty fines – meaning company reputation can take a hit. In a statement following enforcement actions against 16 Wall Street firms, SEC Chair Gary Gensler said:
“If there are allegations of wrongdoing or misconduct, we must be able to examine a firm’s books and records to determine what happened.”
IM tools have become one of the fundamental aspects of propelling business success, advancing productivity and teamwork within organizations, and connecting firms to their clients on a more personal level. Thus, creating policies covering all aspects of compliance, from proper platform use to archiving processes, is a number one priority. The regulatory compliance train has left the Terminal and is continuing to gain speed. Are you on board?
