The Securities Industry Association (SIA), the Bond Market Association (TBMA), the Futures Industry Association (FIA) and the Financial Information Forum (FIF) have conducted an industry-wide business continuity planning, or BCP, test to test the ability of primary securities market participants to operate through a significant emergency.
The test, which included both buy-side and sell-side participation, demonstrated and verified the capacity of firms, markets and utilities to continue functioning and communicating during an emergency by using backup sites, recovery facilities and backup communications across the industry.
More than 250 securities firms, exchanges, markets, service bureaus and industry utilities participated in the test which included components for equities, fixed-income, options, futures, settlements and money markets.
“For the second annual industry test, we saw increased participation and very encouraging results,” says Howard Sprow, the director of business continuity planning with the Securities Industry Association. “This is a testament to the amount of work done by securities firms and market entities to improve the ability of the securities markets to recover from significant emergencies.”
During the test, which accounted for more than 80 percent of normal market trading volume, firms and service bureaus were able to connect simultaneously by utilising backup data centers and communications links, alternative trading sites and alternate operations facilities to place test orders, receive simulated executions and conduct settlement and payment interactions.
The test achieved a 95 percent overall success rate and did not encounter significant complications for any individual exchange or firm. When problems did arise, most were resolved quickly, allowing the test orders to be placed and processed.
“The test was a tremendous success and based on the results, we fully expect that all facets of the industry would be able to operate effectively during an emergency,” adds Joseph Sack, an executive vice president with the Bond Market Association. “The backup strategies for firms and market entities performed extremely well and industry participants were able to promptly clear most technical issues.”