The UK Financial Services Authority (FSA) has told banks and other financial firms that they should record traders' mobile phone conversations as part of a crackdown on insider dealing.
The FSA, which has become increasingly active in the pursuit of criminal activity in the London financial markets, wants companies involved in the financial service industry to record all "relevant communications" carried out by staff on company issued cell phones or other mobile handheld devices.
While the FSA provided no information as to how companies could implement this level of monitoring, the industry regulator said its "request" would cover about 16,000 handsets and estimated the cost to the industry as about £11 million to set up, and about £18 million a year to maintain.
The FSA has required firms to record conversations on fixed line telephones for the last year, but with mobile phones being excluded. However, the regulator said technology had advanced enough to include mobile handsets and remove a loophole in the rules.
While the FSA has requested firms should take "reasonable steps" to ensure that bankers and traders do not carry out such communication on private phones, which cannot be recorded for privacy reasons, the complexity of monitoring calls made via company handsets is formidable.
However, following a number of successful convictions for insider trading, the FSA would seem to have been given the unofficial OK by the government to push forward with other initiatives in an attempt to improve the creditability of the City of London financial markets.
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