Security warnings prompt BC action

NEW YORK – Far more effectively than any disaster recovery drill, the alarming terrorist warnings in early August from the Bush administration have jolted some securities firms into action and underscored for others the absolute necessity for creating and testing recovery and continuity plans.

Intelligence retrieved, and later relayed to the media, indicated that Al Qaeda has set its sights on: the New York Stock Exchange (NYSE); Citigroup buildings in Manhattan and Long Island City, Queens; Prudential Financial in Newark, New Jersey; the International Monetary Fund (IMF) and the World Bank in Washington, DC; and the Bank of America building in San Francisco.

Industry consensus seems to be that the global trading technology infrastructure is, in many ways, more secure than it was on September 11, 2001. Few officials of user firms would comment on the situation other than to provide assurances that they have frequently tested disaster recovery/business continuity planning (DR/BCP) strategies in place. Some firms are sceptical about the warnings and the reactions it has caused.

Steve Swanson, chief executive officer and president of Charleston, South Carolina-based electronic broker-dealer Automated Trading Desk (ATD), says the terror threats may have been "a bit overblown… even if they were not, I still think the US equity system is secure. While the NYSE could easily be a target, Nasdaq presents a capable back-up", Swanson says. "While I'm sure Nasdaq is something of a target, it is a distributed trading platform without a singular live trading floor."

Although the Nasdaq Stock Market has offices in Manhattan, its primary data centre and operations are in Connecticut with a mirrored site in Maryland, reminds Steve Randich, executive vice-president of operations and technology and chief information officer, for Nasdaq. "Connecting those sites, which are 300 miles apart, is fully redundant. Any one of those market participants – along the 300-mile route – will be connected to those data centres," Randich says.

Nasdaq also has a diverse telecommunications network that would function in the event of another strike. "We don't have back-up for all our telecommunications, nor do we need it. It's tested regularly," Randich says. Nasdaq, he says, is continually conducting DR/BCP tests, which are encouraged by the Securities Industry Association. Nasdaq tests for infrastructure integrity once every quarter.

Being prepared can also lead to cooperation. "Last year, we shifted, by the SEC's urging, to be able to back-up New York," Randich says. If the NYSE were shut down, Nasdaq could handle the overflow, he says. "We would use that system to trade all stocks listed in the US if the NYSE was incapacitated for a period of time." This would obviously entail more volume, he says. "We already trade 12% of the daily New York volume on a system we've been using for well over a decade."

NYSE officials were unavailable for comment at press time. OpRisk