The Financial Industry Regulatory Authority released Regulatory Notice 15-43 to alert member firms of its authority to designate certain member firms as mandatory participants in FINRA’s business continuity/disaster recovery (BC/DR) testing. Under Regulation SCI, FINRA must establish, maintain and enforce BC/DR standards in addition to designating which firms must participate in the testing of its BC/DR plans.
Under Rule 4380, FINRA will choose designated firms for mandatory participation based on their volume of activity on a FINRA market system over a certain period of time. FINRA set forth specific participation criteria for the following six member-facing systems: equity trade reporting facilities, equity order audit trail systems, equity quotation display and trade reporting facilities, unlisted equity quotation display facilities, and fixed income trade reporting systems. FINRA’s designation criteria would result in five to nine firms per system being included in the BC/DR tests. Such coverage would represent at least 50 percent of the activity on each system. If a member firm is designated to participate in FINRA’s mandatory BC/DR testing, that firm will be required to comply with certain testing requirements, such as processing test scripts to simulate trading activity.
Regulatory Notice 15-43 is available here.