Notice to Members 04-37

SEC Approves Rules Requiring Members to Create Business Continuity Plans and Provide Emergency Contact Information

Effective Dates: Rule 3510: Clearing Firms: August 11, 2004 Introducing Firms: September 10, 2004 Rule 3520: All Firms: June 14, 2004

On April 7, 2004, the Securities and Exchange Commission (SEC) approved the new NASD Rule 3500 Series, which requires members to establish emergency preparedness plans and procedures. Rule 3510 requires each member to create and maintain a business continuity plan and enumerates certain requirements that each plan must address. The Rule further requires members to update their business continuity plans upon any material change and, at a minimum, to conduct an annual review of their plans. Each member also must disclose to its customers how its business continuity plan addresses the possibility of a future significant business disruption and how the member plans to respond to events of varying scope. Rule 3520 requires members to designate two emergency contact persons and provide this information to NASD via electronic process.

The Rule 3500 Series, Emergency Preparedness, is included in this Notice as Attachment A. NASD’s Small Introducing Firm Template will be available at

Questions regarding this Notice may be directed to Daniel M. Sibears, Senior Vice President & Deputy, Member Regulation, Regulatory Policy and Oversight (RPO), (202) 728-6911; or Shirley H. Weiss, Associate General Counsel, Office of General Counsel, RPO, at (202) 728-8844.