The main complaint of the GAO's report is the financial industry's state of pandemic preparedness. Of the seven organizations studied, only one had completed its formal plan for pandemic response. Further, notes the report, the concentration of traders within these organizations is a severe vulnerability. Concerns also linger that in the event of pandemic event, such as an avian influenza outbreak, the telecommunications infrastructure that is currently in place may not be adequate to handle increased remote traffic. The GAO is not sold on the results of tests such as the annual business continuity planning market tests conducted by multiple industry associations.

To solve this dilemma, the GAO is calling upon industry regulators. SEC officials, according the report, have already drafted a rule that establishes and requires adherence with the tenets of the automation review policy program that currently oversees clearing and market organizations. The rule is expected to be submitted to the Commissioners this spring. The GAO encourages the passing of such a rule, stating, "Without such official expectations, market participants may not adequately prepare plans that are sufficiently robust to address the more serious scenarios, which could include widespread illnesses, deaths, transportation bans, or telecommunications bottlenecks."

It should prove interesting to see such a rule play out, and how the SEC will establish accountability for the resiliency of an infrastructure that touches every member of the financial markets.

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