Business Continuity Planning
FINRA requires firms to create and maintain written business continuity plans (BCPs) relating to an emergency or significant business disruption. Rule 4370—FINRA's emergency preparedness rule — spells out the required BCP procedures. A firm's BCP must be appropriate to the scale and scope of its business.
BCP procedures must be reasonably designed so the firm can meet its existing obligations to customers. A firm must disclose to its customers how its BCP addresses the possibility of a significant business disruption and how the firms plan to respond to events of varying scope. This BCP disclosure must be made in writing to customers when they open their account, posted on the firm's website if they maintain one and mailed to customers upon request. The BCP also must be made available promptly to FINRA staff if requested.
What to Include in a Business Continuity Plan
FINRA Rule 4370 gives a firm flexibility in designing a BCP. It may be tailored to the size and needs of the firm, but at a minimum it must include the following elements:
- Data backup and recovery (hard copy and electronic);
- All mission critical systems;
- Financial and operational assessments;
- Alternate communications between customers and the firm, and between the firm and employees;
- Alternate physical location of employees;
- Critical business constituent, bank, and counterparty impact;
- Regulatory reporting;
- Communications with regulators; and
- How the firm will assure customers' prompt access to their funds and securities in the event that the firm determines that it is unable to continue its business.
A firm must address the elements to the extent applicable and necessary. If any of the elements is not applicable, the firm's BCP must document the rationale for not including the element in its plan. If a firm relies on another entity for any one of the elements or any mission critical system, the firm's BCP must address this relationship.
FINRA provides the following optional tools to assist firms in in fulfilling their need to create and maintain business continuity plans (BCPs) and emergency contact person lists under FINRA Rule 4370.
- Small Firm Business Continuity Plan Template
- Business Continuity Planning Case Study
- 2009 Pandemic Preparedness Survey Results
Communicating with FINRA
Firms must provide FINRA with emergency contact information. In addition, if a firm is unable to contact FINRA during a significant business disruption through its usual contact, such as the District Office or direct dial number, please call FINRA's Gateway Call Center at (301) 590-6500. This number will be rerouted in the event of a business disruption at FINRA's primary call center, so that the firm will be able to reach an operator or receive recorded instructions. This information also will be posted on www.finra.org.
In instances when data communications are disrupted, firms are responsible for retaining data until it can be transmitted to FINRA.
FINRA's Business Continuity Plan
FINRA's BCP specifies how we will respond to events that significantly disrupt our business and addresses safeguarding our employees and property; insuring data back up and recovery; restoring mission-critical systems as well as critical regulatory and operational activities; alternative communications with investors, member firms, associated persons, and other regulators; and assuring all of our constituents a prompt response to their needs. We plan to continue in business, transfer operations to alternate sites as needed, and maintain as much transparency to our constituents as possible during a disruption. FINRA's business continuity plan is updated and tested regularly, and it is provided to the SEC as part of its oversight of FINRA.
FINRA's Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see FINRA OGC Interpretative Guidance for more information.