BUSINESS CONTINUITY PLANNING
Business continuity remains a priority for firms and their associated persons. It is important that firms maintain adequate business continuity and contingency plans, and ensure that employees are aware of and understand these plans.
BC/DR Testing Under Regulation SCI
As required by Regulation Systems Compliance and Integrity (Regulation SCI), FINRA, in 2015, adopted Rule 4380 requiring member firm participation in business continuity and disaster recovery (BC/DR) testing. The rule authorizes FINRA to designate firms that must participate in FINRA’s annual BC/DR test based on established standards, which FINRA published in Regulatory Notice 15-43. Since FINRA published Notice 15-43, it began collecting transaction reports for U.S. Treasury securities. This Notice updates the criteria in Notice 15-43 to include criteria for designating firms that report a significant volume of transactions in U.S. Treasury securities to TRACE for mandatory BC/DR testing participation.
• FINRA Regulatory Notice 18-09 (March 7, 2018): FINRA Updates Designation Criteria to Require Firms Reporting U.S. Treasury Securities to TRACE to Participate in FINRA’s Business Continuity/Disaster Recovery Testing
Designation Information Regarding Mandatory Participation in Business Continuity and Disaster Recovery Testing
The SEC adopted Regulation Systems Compliance and Integrity (Regulation SCI) and requires the MSRB, as an SCI entity, to, among other things, require certain brokers, dealers, municipal securities dealers and municipal advisors registered with the MSRB (MSRB Registrants) to participate in the testing of the operation of the MSRB’s business continuity and disaster recovery plans (BC/DR Plans), in the manner and frequency specified by the MSRB, provided that such frequency shall not be less than once every 12 months. To facilitate this Regulation SCI requirement, the MSRB adopted Rule A-18, on mandatory participation in business continuity and disaster recovery testing, on November 2, 2015.
Under Rule A-18, the MSRB designates as Participants in the mandatory functional and performance testing of the operation of the MSRB’s BC/DR Plans those MSRB Registrants whose submissions of data to the MSRB, taken as a whole, account for a meaningful percentage of the MSRB’s data submission volume required to be provided by MSRB Registrants, measured during an established time period.
• MSRB Regulatory Notice 2017-06 (March 7, 2017): Designation Information Regarding Mandatory Participation in Business Continuity and Disaster Recovery Testing
Business Continuity Planning
FINRA, the SEC and CFTC issued a joint advisory on business continuity planning to encourage firms to review their business continuity plans and to provide best practices to help improve responses to, and to reduce recovery time after, significant large-scale events.
• FINRA Regulatory Notice 13-25 (August 2013): FINRA, the SEC and CFTC Issue Joint Advisory on Business Continuity Planning