It won't go into effect until 11/14/2011, but U.K. regulator FSA will be requiring firms to record the mobile-phone conversations [C-I: and presumably text messaging] of certain employees - in an effort to combat insider trading.  The rule is an extension of current regulations that require taping of conversations re: client trading over land-lines and will apply to approximately 16,000 mobile phones of financial employees in the U.K., the agency said.

    The new rule will apply to employees who place or take client orders in equities or bonds, as well as in financial and commodities derivatives.  FSA also is introducing a rule that conversations related to such transactions cannot be held on personal mobile phones, or through personal electronic communications, such as private email, Skype or "chat" accounts.  The conversations will be reviewed by compliance units of the firms and also by the FSA.

    The cost to all financial firms is expected to be a one-off charge of $17.7 million in total for installation of recording equipment, and an annual cost of $29 million for the monitoring and for storing the recordings for 6 months.  FSA said the new rules are fully compliant with EU privacy laws. 

FSA's new rule would be the 1st in Europe that specifically applies to monitoring conversations on business cell phones.   Let's anticipate it's adoption in the United States and in other countries.   [WSJ, 11/12]