Federal Contingency Plan Rules Close to Release

November 7, 2002 (PLANSPONSOR.com) - Federal regulators are close to publishing new rules on the responsibility of the financial markets to have contingency planning in place for emergencies like 9/11, according to one official.

Jeff Mooney, US Securities and Exchange Commission (SEC) senior special counsel, told participants in a Florida conference that the proposed rules will relate to research released this year by the SEC and the Federal Reserve, Dow Jones reported.

Based on the research, regulators have said they are particularly concerned with structural weaknesses in the government securities clearing system as well as other vulnerabilities in the market infrastructure.

Dow Jones said that in his conference remarks, Mooney said regulators were examining what they should be responsible for in figuring out how to cope with disasters on the scale of last year’s terrorist attacks.

The attacks harmed financial markets and showed the need for geographically separate backup locations.

The Bank of New York (BNY) was particularly hard hit by the aftermath of the 9/11 attacks – being forced to struggle for weeks to properly reconcile clients’ post September 11 trades.

BNY executives pointed to damaged telephone lines for much of the problem, but also argued that problems with vendors’ communications systems also hurt them.   BNY estimated it paid about $45 million to compensate customers for non-executed or slowly executed trades.

Meanwhile, other financial services firms impacted by the attacks immediately put contingency plans into place and reported relatively smooth operations (See  Financial Firms Implement Contingency Plans ).