Compliance

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SEC-Approved Business-Continuity Rules Effective Aug. 11

The SEC recently approved the NASD Rule 3500 Series requiring broker-dealer firms to establish emergency preparedness plans and procedures to ensure business continuity.

Rule 3510, which requires firms to create and maintain a business-continuity plan (BCP), update the plan on any material change, and conduct annual review of their plans, will be effective on Aug. 11 for Clearing Firms and on Sept. 10 for Introducing Firms.

The BCP must address ten key areas: (1) books and records back-up and recovery -- both hard copy and electronic, (2) identification of all mission critical systems, (3) financial and operational risk assessment, (4) alternate communications between the firm and its customers, (5) alternate physical location of employees, (6) impact of business disruption on critical business constituent, (7) bank and counter-party, (8) regulatory reporting, (9) communications with regulators, and (10) a procedure for ensuring customer access to funds and securities in the event of failure to continue business operations.

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