On November 19, the Securities and Exchange Commission adopted new Regulation Systems Compliance and Integrity (Regulation SCI), a set of rules designed to strengthen the technology infrastructure of the US securities markets by reducing the occurrence of systems issues and improving resiliency when systems problems do occur.
Specifically, Regulation SCI requires self-regulatory organizations, certain alternative trading systems (ATSs), plan processors and certain exempt clearing agencies to have comprehensive policies and procedures in place for their technological systems as well as a framework for taking appropriate corrective action when systems issues occur, providing notifications and reports to the SEC regarding systems problems and systems changes, informing members and participants about systems issues, conducting business continuity testing and conducting annual reviews of their automated systems.
Regulation SCI will become effective 60 days after it is published in the Federal Register. Covered entities must comply with the requirements nine months after the rules become effective. However, ATSs that meet the volume thresholds for the first time have been given an additional six months from the time that the ATS first meets the applicable thresholds. Further, all covered entities will have 21 months from the effective date to comply with the industry- or sector-wide coordinated testing requirement.
Click here for SEC Press Release 2014-260.