Notice to Members 06-74

Member Business Continuity Experiences regarding Hurricanes Katrina and Rita

In May 2004, NASD issued Notice to Members 04-37 regarding business continuity planning. That Notice addressed NASD Rules 3510 and 3520 and provided supplemental detail regarding the key elements of a business continuity plan (BCP). Following Hurricanes Katrina and Rita in August and September 2005, NASD issued a voluntary survey on the topic of business continuity planning to certain member firms within the affected areas. The objective of the survey was to assess the value of business continuity planning and to learn from these firms’ experiences. Overall, the survey helped provide valuable insight into business continuity planning and the implementation of such plans in the wake of a disaster. Firm responses also provide guidance to all member firms about specific business functions and tools that performed well following these events, as well as those that did not. The information in this Notice does not create new rules or obligations on members, nor does the implementation of any or all of the guidance create a “safe harbor” relative to any NASD rules.

Questions concerning this Notice may be directed to Daniel M. Sibears, Executive Vice President & Deputy, Member Regulation, at (202) 728-8221.