SEC: Stock markets must develop disaster plans

SEC: Stock markets must develop disaster plans

The Securities and Exchange Commission today urged trading markets, such as the New York Stock Exchange, and electronic trading systems to set up business continuity plans by no later than the end of next year.

The directive is the latest in a series of SEC efforts to strengthen the U.S. financial infrastructure in the aftermath of the Sept. 11, 2001, terrorist attacks.

Self-regulated organizations that operate trading markets, such as NYSE and Nasdaq, and the electronic communications networks, such as Island ECN Inc. of New York, will better assure their own resilience and that of the nation's financial systems by establishing continuity plans, SEC deputy secretary Margaret McFarland said in the policy statement.

'In so doing, they will be promoting one of the paramount objectives of the U.S. securities laws'the maintenance of fair, stable and orderly markets,' she said.

SEC said each continuity plan must meet four goals:

  • Allow trading to resume no later than the next business day following a wide-scale disruption


  • Establish geographic diversity between primary and backup sites


  • Assure resilience of important shared information systems


  • Test the effectiveness of backup arrangements.


  • Earlier this year, the General Accounting Office recommended that the commission work with the securities industry to develop strategies to resume trading as rapidly as possible in the event of a disruption and to identify continuity practices that the organizations would have to follow.

    SEC is accepting comments about the policy for 30 days.

    About the Author

    Mary Mosquera is a reporter for Federal Computer Week.

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