Welcome to Financial Advisor IQ
Follow

Broker-Dealers Warned About Continuity and Disaster Recovery Plans

April 24, 2019

Self-regulator Finra has issued a regulatory notice reminding broker-dealers about their duties in regard to business continuity and disaster recovery plans, according to news reports.

The notice applies to a rule the industry’s self-regulator adopted in 2015, as required by the SEC, requiring designated firms to engage in certain testing practices on designated testing days, such as running test scripts simulating trading activity and reporting the test results to Finra, ThinkAdvisor writes. The notice also reminds broker-dealers that even if they’re not designated as having to abide by the business continuity and disaster recovery plan rules, they can still participate in the testing voluntarily, according to the publication. The same applies to third-party service providers such as service bureaus that transmit data to Finra on behalf of broker-dealers, the regulator says, according to ThinkAdvisor.

The most recent regulatory notice essentially consolidates the criteria for broker-dealers who need to have the plans as already announced in previous notices, according to the publication.

Finra

These notices designated the firms as participants when 5% or more of the trades were reported to Finra’s various reporting facilities provided that the cumulative trade volume accounted for at least 50% of all trade volume reported to the facilities during six months preceding designation, according to the notice.

Finra also sought comment in February on whether broker-dealers had put business continuity plans in place and whether forming and maintaining these plans was cost-efficient, ThinkAdvisor writes.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.