U.S. securities regulators put a further onus on financial firms to keep records of their business this week, this time focusing on the increasingly popular form of communication known as instant messaging (IM).
The National Association of Securities Dealers (NASD) informed its roughly 5,300 brokerage firm members Wednesday that they must retain their IM records for at least three years. Under federal law, every securities firm doing business with the U.S. public must be a member of NASD.
The rule, which follows similar regulations with regard to e-mail, could leave financial firms scrambling to rein in employees' use of the quickfire communication tool. What's more, NASD also advised that securities firms must supervise employees' IM use, and that consumer IM products are often not adequate because they don't allow for monitoring.
"Firms have to remember that regardless of the informality of instant messaging, it is still subject to the same requirements as e-mail communications and members must ensure that their use of instant messaging is consistent with their basic supervisory and record keeping obligations," NASD Vice Chairman and President of Regulatory Policy and Oversight Mary L. Schapiro said in a statement.
While financial firms have been early adopters of corporate IM products that offer archiving capabilities, the new rule could still affect firms that have not put monitoring practices into place or have some employees who are using consumer IM products in addition to company-sanctioned IM tools.
Francis deSouza, chief executive officer of IM management provider IMlogic, said that the rule is a "wake-up call" to securities firms that IM is a tool used for doing billions of dollars worth of business and is no longer a toy for teenagers.
"Firms will now realize that they have to make their IM system enterprise class, with monitoring, security, and usage reporting," deSouza said.
Olivier Beauvillain, a Paris-based analyst with Jupiter Research, said that the new rule could lead companies to put the same sort of restrictions on IM as they put on workplace Web use, even if employees are using it for personal reasons, to communicate with friends and family.
But while security firms are under the gun to rope in their employees' messaging habits, the rule could spell good news for the growing number of corporate IM vendors. Leaders in the consumer IM market, such as. Microsoft, Yahoo, and America Online (AOL) have all rolled out corporate versions of their products in recent months and could stand to benefit from the new regulations.
In fact, deSouza said that he expects that there will be a rush by financial firms over the next few months to get their IM systems up to speed.
"Our phones began ringing this morning," deSouza noted.
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