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WHEN THE COMPLIANCE POLICE COME CALLINGby Eugene GrygoLike many things in financial technology, compliance is not what it used to be.More and more, financial services firms have to meet new compliance requirements for the social media channels that are becoming essential for marketing and customer communication. Cyber-security compliance is quickly moving up on the to-do list, while well-established realms such as over-the-counter voice-based trading face new compliance demands.FTF News is chronicling the ops challenges that are coming with these three new battlegrounds for compliance.SOLVING THEFirms are finding that investment in social media compliance is not the burden that some thought it might be but it does consume resources and time. Getting it right relies on putting together a team that shares the responsibilities of compliance. Our story starts below.Also, there was a time when cyber-security in the financial services industry was the realm of IT wizards who conjured mysterious solutions to protect the enterprise. However, as recent high-profile security breaches have underscored, that time is no more, with hackers trying to get the upper hand while the regulators and major industry players wake up to the growing threat of cyber-attacks. The story starts on Page 14.While hackers push the edges of cyber- security, the reach of over-the-counter (OTC) regulatory reform encompasses more than electronic trading. Many OTC instruments are transacted via voice-based systems that are under the purview of regulators thanks to Dodd-Frank and MiFID II stipulations. Voice-based trades, instant messages and emails have to be recorded and kept for posterity so that trading firms and regulators can piece together and review transactions. Our coverage starts on Page 22.We wish you luck as yournew adventures in compliance get underway.RIDDLE OF SOCIAL“Most companies went through a progression of ‘This is a toy. It’s a fad. We’re not going to use it in our business,’” Marsh says about social media. Then the compliance departments at many firms started to educate themselves. “Meanwhile, the marketing departments and advisers and financial professionals themselves are starting to realize that there’s some legitimate use cases for social media, to the point where, ultimately, I think everybody realized, ‘It is a real tool,’” he says.With that realization, compliance departments have been catching up with the industry, Marsh says.“They’ve learned what the tools can do for their organizations,” Marsh says. “They, in many cases, have drafted their policies for social media, determining what they’re going to permit and what they’re going to prohibit in their organization. A lot of companies have that nailed down.”But as for actual record keeping and supervision of compliance on location, a lot of companies “still fall pretty short,” Marsh says. “We do an annual survey in the financial industry ... and there’s still a pretty big gap between those companies that have a policy permitting social media, for example, and the subset of those that actually do archive it and monitor it the way that they should be.”Continued on Page 12MEDIA COMPLIANCEby Eugene GrygoFirms are putting a lot of effort into saying very little about themselves via social media websites.Social media compliance is turning out to be a bit of a riddle for many financial services firms.Regulatory guidances and good business practices are forcing operations, compliance, IT, marketing and even human resources teams to take part in a major responsibility whose express purpose is to make sure nothing is said on social media websites that would cause trouble. At the same time, firms have to say just enough to satisfy current customers and attract new ones.Walking this tightrope will mean that firms may struggle a little to find the right mix of social media compliance tools. The first step, which many firms have taken, is to take social media seriously, says Stephen Marsh, the founder and CEO of Smarsh, a cloud-based archiving and compliance solution provider for electronic communications.11FALL 2014 | FTF NEWS MAGAZINE