SEC Approves NASD and NYSE Business Continuity Rules


Washington, D.C., April 16, 2004 - On April 7, the Securities and Exchange Commission approved rules proposed by NASD and the New York Stock Exchange (File Nos. SR-NASD-2002-108 and SR NYSE-2002-35), which require NASD and NYSE members to develop business continuity plans that establish procedures relating to an emergency or significant business disruption.

Under the new rules, every NASD and NYSE member must develop a plan that addresses various aspects of business continuity, including data back-up and recovery, mission critical systems, and alternate communications between the firm and its employees and the firm and its customers. In addition, a member's business continuity plan must address how the member will assure its customers' prompt access to their funds and securities in the event that the member determines that it is unable to continue its business. Every NASD and NYSE member also will be required to disclose to its customers a summary of its business continuity plan that addresses how the member intends to respond to potential disruptions of varying scope.

Commission approval of these rules represents another important step to address the risks faced by market participants in the post-September 11 environment. In September 2003, the Commission issued a policy statement setting forth its view that self-regulatory organizations operating trading markets and electronic communication networks should apply certain basic principles in their business continuity planning. (See Policy Statement: Business Continuity Planning for Trading Markets, which is available on the Commission's website at In addition, in April 2003, the Commission, along with the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency, issued an interagency paper that identifies sound practices for business continuity planning by key participants in the payment and settlement systems. (See Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System, which is available on the Commission's website at

The Commission believes it is important for securities firms to take concrete steps to strengthen their resilience and to address the continuing risks to the U.S. financial system posed by the post-September 11 environment. The recently-approved business continuity rules should help achieve that goal for individual firms and the securities industry as a whole.


Last modified: 4/16/2004