Securities industry simulates attacks on NY

New York -- In a mid-May simulation of a response to physical attacks on New York City, broker-dealers tested their business continuity plans (BCPs) under the watchful eyes of their regulators.

Some 13 large broker-dealers, the Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), the Nasdaq, data providers, industry utilities, utility providers and government agencies participated in the first co-ordinated preparedness exercise involving a cross-section of industry participants.

All the broker-dealers were either member firms of the NYSE or the Nasdaq, both of which require their member firms to have specific BCP rules. In April this year, the SEC approved BCP requirements that reflected the frameworks demanded by the two self-regulatory organisations.

The industry participants responded to a multi-stage scenario that began with an isolated explosion in midtown Manhattan, which then escalated to a second explosion in the financial district, damaging facilities, disrupting transportation and temporarily closing the markets.

At each stage, the participants determined which elements of their firms' business continuity plan they would activate, including communication to employees and the public, evacuation of offices and data centres, and activation of back-up sites. The participants were also able to evaluate how well their response was co-ordinated with industry-wide efforts. After the final stage, each group presented a status report indicating its level of preparedness for the market opening the next day.

Altogether, more than 400 people participated in the exercise, including the people stationed in each participating firm's facilities.

At the press briefing held after the exercise, Donald Kittell, executive vice-president at the Securities Industry Association (SIA), described the exercise as "successful". "The exchange of ideas and questions raised at the exercise will help each firm, and the industry itself, refine its disaster recovery plans," said Kittell. He said the presence of the Office of Emergency Management, regulators and other observers enabled the broker-dealers to receive immediate answers to the questions raised during the discussions.

Additional exercises are planned for later in the year.