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NEW YORK CITY-The terrorist attacks of Sept. 11, 2001 and the August 2003 blackout were two events here that underscored the need for companies to have disaster recovery plans. A number of major broker-dealers put their plans to the test during a simulation exercise where they responded to a scenario where the city is hit by two bombs-—one in Midtown and another in the financial district.

Working in company teams manned by technology, compliance and operations officers, the companies participated in a four-hour tabletop exercise. As the events of the scenario, escalated, the firms evaluated business continuity plans to check the level of preparedness.

Noting that this effort was just a start, Joseph Sack, executive vice president of Securities Industry Association tells GlobeSt.com that it highlighted both the need for increased communication within the industry and the necessity of having fully functional back offices. “The technology is such that many firms can instantly switch to back up,” he says, adding that the securities firms have invested heavily in preparedness initiatives.

SIA EVP Donald Kittell points out that the exercise underscored the value of “a broad, strong partnership involving broker-dealers, markets, utilities, regulators and other government agencies.”

Participants included volunteers from Bank of America, Bear Stearns, Bank of New York, Citibank, Credit Suisse First Boston, Deutsche Bank, Edward Jones, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS. The exercise was a joint effort of the SIA and the Bond Market Association. Other participants included the Securities and Exchange Commission, the New York Stock Exchange and Nasdaq, as well as various data providers, industry utilities, utility providers, and government agencies.

“Uninterrupted communication is vital to the ability of key market participants to keep the markets functioning,” notes Sack. A similar follow-up exercise is planned for the fall.

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