TEXT EXAMPLE of BCP Disclosure Statement for Introducing Firms with a Clearing Arrangement
This sample Disclosure Statement is provided as an optional guide to introducing firms to assist them in fulfilling their need to provide a disclosure statement to customers. Using this sample Disclosure Statement does not guarantee compliance with or create any safe harbor with respect to FINRA rules, other self-regulatory organization (SRO) rules, the federal securities laws, or state laws. The obligation to provide disclosure to customers pursuant to Rule 3510(e) is not a "one-size-fits-all" requirement. Your disclosure must reflect your business continuity plan, and you must tailor your disclosure to fit your particular firm's situation. You may need to confer with your clearing firm to make sure all of your representations regarding clearing firm services in your Disclosure Statement are accurate.
* * * *
[Firm Name]’s Business Continuity Planning
[Firm Name] has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.
Contacting Us – If after a significant business disruption you cannot contact us as you usually do at [firm phone number/email], you should call our alternative number [firm emergency number] [or go to our web site at {URL}]. If you cannot access us through either of those means, you should contact our clearing firm, [name], at [clearing firm number and URL] for instructions on how it may [list the services your clearing firm may provide to your customers in the event of a significant business disruption; for example, provide prompt access to funds and securities, enter orders and process other trade-related, cash, and security transfer transactions for your customers].
Our Business Continuity Plan – We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.
Our business continuity plan addresses: data back up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt access to their funds and securities if we are unable to continue our business.
Our clearing firm, [name], backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by our clearing firm that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments within [resumption time period]. Your orders and requests for funds and securities could be delayed during this period.
Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we will transfer our operations to a local site when needed and expect to recover and resume business within [x time period]. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and recover and resume business within [y time period]. In either situation, we plan to continue in business, transfer operations to our clearing firm if necessary, and notify you through our web site [URL] or our customer emergency number, [firm emergency number] how to contact us. If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customer’s prompt access to their funds and securities.
For more information – If you have questions about our business continuity planning, you can contact us at [firm business number or email address].
