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.
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 business continuity plan is updated and tested regularly, and it is provided to the SEC as part of its oversight of FINRA.
FINRA's emergency preparedness rule requires firms to create and maintain business continuity plans (BCPs) appropriate to the scale and scope of their businesses, and to provide FINRA with emergency contact information.
|The Disaster Recovery Institute||Link||02-09-2015|
|Financial Services Sector Coordinating Council|
Financial Services Sector Coordinating Council for Critical Infrastructure Protection & Homeland Security
|Securities Industry and Financial Markets Association's Business Continuity Planning Page||Link||02-09-2015|
|Business Continuity Plans||Industry||11-01-2012|
|FINRA’s Business Continuity Planning Template||Podcast||07-19-2010|
|Pandemic Preparedness- Part II||Podcast||12-21-2009|
|Pandemic Preparedness- Part I||Podcast||11-23-2009|
|Regulatory Notice 09-60|
SEC Approval and Effective Dates for New Consolidated FINRA Rules
|Regulatory Notice 09-59|
FINRA Provides Guidance on Pandemic Preparedness
|Regulatory Notice 07-49|
Guidance for Firms Affected by the California Wildfires
|Small Firm Emergency Partner Program||Podcast||10-16-2007|
|FINRA Announces Small Firm Emergency Partner Program||News Release||10-11-2007|
|Notice to Members 06-74|
Member Business Continuity Experiences regarding Hurricanes Katrina and Rita
|Notice to Members 06-31|
NASD Requests Comment on Regulatory Relief that Should Be Granted in Response to a Possible Pandemic or Other Major Business Disruption
|Notice to Members 05-57|
Guidance to Members Affected by Hurricane Katrina
|Notice to Members 04-37|
SEC Approves Rules Requiring Members to Create Business Continuity Plans and Provide Emergency Contact Information
|Notice to Members 02-23|
The NASD Seeks Comment on Proposed Rules Relating to Member Firm Business Continuity Plans and Emergency Contact Information
|NASD Board Approves Disaster Recovery Business Continuity Plan||News Release||03-21-2002|
|Business Continuity Planning Case Study||Document||03-21-2002|
|Small Firm Business Continuity Plan Template||Industry||03-21-2002|
|FINRA's Business Continuity Plan||Industry||03-21-2002|
|Small Firm Emergency Partner Program||Industry||03-21-2002|