IOSCO reports on business continuity plans for trading venues and intermediaries 

The Board of the International Organization of Securities Commissions (IOSCO) today published two reports that seek to enhance the ability of financial markets and intermediaries to manage risks, withstand catastrophic events, and swiftly resume their services in the event of disruption.

The report Mechanisms for Trading Venues to Effectively Manage Electronic Trading Risks and Plans for Business Continuity provides a comprehensive overview of the steps Trading Venues take to manage the risks associated with electronic trading and the ways they plan for and manage disruptions through BCPs. As technology continues to evolve, leading to different ways to operate and access markets, so too will Trading Venues have to continuously consider the impact of these changes and adapt, to protect themselves, their participants and investors.

The report discusses IOSCO findings based on the surveys responses from Trading Venues and Trading Venue participants from more than 30 jurisdictions. The report makes recommendations to help regulators ensure that trading venues are able to manage effectively identified risks, such as those related to technology. It also proposes sound practices that should be considered by trading venues when developing and implementing risk mitigation mechanisms and business continuity plans aimed at safeguarding the integrity, resiliency and reliability of their critical systems. Appendix A contains the list of recommendations and sound practices.

IOSCO recognizes that not every sound practice will work for all Trading Venues. Use of any sound practice would be at the discretion of each Trading Venue.

The second IOSCO report, Market Intermediary Business Continuity and Recovery Planning, sets forth two standards for regulators and sound practices that regulators could consider as part of their oversight of market intermediaries. These sound practices may also prove useful to intermediaries who are developing and implementing business continuity plans. Appendix B contains the list of standards and sound practices.

As in the case of trade venues, not every sound practice will be appropriate or equally effective for all market intermediaries. However, IOSCO would still encourage individual market intermediaries to consider these sound practices where relevant to their activities

Recent disruptive events and emerging threats in major international financial markets highlighted the need to examine and identify the key measures and arrangements in place at trading venues and market intermediaries to restore their “critical” functions should a disruption occur.  The reports also take into account the 2006 Joint Forum Report High-level Principles for Business Continuity.

Both reports are based on consultation reports published earlier this year.  They also draw on the results of surveys of IOSCO members and stakeholders, and feedback from roundtables organized with industry participants.

A key objective of the reports is to help identify and address possible weaknesses or gaps in the business continuity plans and recovery strategies of trading venues and market intermediaries.

Source: IOSCO – IOSCO reports on business continuity plans for trading venues and intermediaries

---