2006_London_Risk_Mgmt_Expo_BCP

Panel Session:Panel Session:
Overview of U.S. Securities IndustryOverview of U.S. Securities Industry
Business Continuity TestingBusiness Continuity Testing
Wednesday 15Wednesday 15thth March 2006March 2006
Joseph SackJoseph Sack
Executive Vice PresidentExecutive Vice President
The Bond Market AssociationThe Bond Market Association
Greg FerrisGreg Ferris
Managing Director and Global Head of BusinessManaging Director and Global Head of Business
Continuity Planning, Morgan StanleyContinuity Planning, Morgan Stanley
Chairman, Securities Industry AssociationChairman, Securities Industry Association
Business Continuity Steering CommitteeBusiness Continuity Steering Committee
Peter PoulosPeter Poulos
Director and Americas Head of BusinessDirector and Americas Head of Business
Continuity Management, Credit SuisseContinuity Management, Credit Suisse
Chairman, The Bond Market Association BusinessChairman, The Bond Market Association Business
Continuity Management CouncilContinuity Management Council
CoCo--Chair, Securities Industry Association BusinessChair, Securities Industry Association Business
Continuity Subcommittee on Industry TestingContinuity Subcommittee on Industry Testing

Panel Session: Overview of U.S. Securities Industry Business CoPanel Session: Overview of U.S. Securities Industry Business Continuity Testingntinuity Testing 22
AgendaAgenda
IntroductionIntroduction
•• U.S. Securities Industry Trade Associations focused on BusinessU.S. Securities Industry Trade Associations focused on Business ContinuityContinuity
•• Industry Wide Testing within the U.S. Securities IndustryIndustry Wide Testing within the U.S. Securities Industry
•• Benefits to the Securities IndustryBenefits to the Securities Industry
Overview of U.S. Securities Industry Business Continuity TestingOverview of U.S. Securities Industry Business Continuity Testing
20042004
US Securities Industry Tabletop ExerciseUS Securities Industry Tabletop Exercise
Industry Wide Business Continuity Phase 1 Connectivity TestsIndustry Wide Business Continuity Phase 1 Connectivity Tests
20052005
“TopOff 3” Exercise“TopOff 3” Exercise
1515thth October 2005 Industry Wide Business Continuity Test and LessonOctober 2005 Industry Wide Business Continuity Test and Lessons Learneds Learned
20062006
1414thth October 2006 Annual Industry Wide Business Continuity TestOctober 2006 Annual Industry Wide Business Continuity Test
Other 2006 Business Continuity InitiativesOther 2006 Business Continuity Initiatives
•• Infectious Disease Preparedness Task ForceInfectious Disease Preparedness Task Force
•• Explore InterExplore Inter--Region Coordination OpportunitiesRegion Coordination Opportunities

U.S. Securities Industry Trade Associations focused on BusinessU.S. Securities Industry Trade Associations focused on Business ContinuityContinuity
•• Securities Industry Association (SIA)Securities Industry Association (SIA) –– www.sia.comwww.sia.com
•• The Bond Market Association (TBMA)The Bond Market Association (TBMA) –– www.bondmarkets.comwww.bondmarkets.com
•• Futures Industry Association (FIA)Futures Industry Association (FIA) –– www.futuresindustry.orgwww.futuresindustry.org
•• Financial Information Forum (FIF)Financial Information Forum (FIF) –– www.fif.comwww.fif.com
IntroductionIntroduction
Industry Wide Testing within the U.S. Securities IndustryIndustry Wide Testing within the U.S. Securities Industry
(e.g., Y2K and Decimalization)(e.g., Y2K and Decimalization)
Benefits to the Securities IndustryBenefits to the Securities Industry
•• Stakeholders to share ideas and best practicesStakeholders to share ideas and best practices
•• Speak with one voice and effectively coordinate with regulatorsSpeak with one voice and effectively coordinate with regulators and other governmentand other government
agenciesagencies
•• Coordinated industry testing and dramatically enhanced the finanCoordinated industry testing and dramatically enhanced the financial services sectorcial services sector
response to wideresponse to wide--scale events (i.e., 9/11 v. 2003 East Coast Blackout)scale events (i.e., 9/11 v. 2003 East Coast Blackout)

Date:Date: 1818thth May 2004May 2004
CoCo--Sponsors:Sponsors: SIA and TBMASIA and TBMA
Was the first securities industry business continuity tabletop eWas the first securities industry business continuity tabletop exercise in the U.S.xercise in the U.S.
Scope:Scope:
Assess how firms respond individually and collectively as an indAssess how firms respond individually and collectively as an industry to a wideustry to a wide--scale disruptionscale disruption
Strengthen the industry’s ability to respond to a significant diStrengthen the industry’s ability to respond to a significant disruptionsruption
Assess communications during the exercise among firms, counterpaAssess communications during the exercise among firms, counterparties, industry utilities andrties, industry utilities and
service providersservice providers
The exercise was divided into three modules, each of which incluThe exercise was divided into three modules, each of which included an overview of the disruptiveded an overview of the disruptive
events, a breakout session for discussions by the firm teams andevents, a breakout session for discussions by the firm teams and time for open discussion wheretime for open discussion where
participants could ask questions and offer commentsparticipants could ask questions and offer comments
Participants:Participants:
13 major financial firms participated13 major financial firms participated
Outcome:Outcome:
Majority of participants felt the exercise was valuable and prodMajority of participants felt the exercise was valuable and productiveuctive
85% rated it excellent or good and only 15% rated the exercise a85% rated it excellent or good and only 15% rated the exercise as satisfactorys satisfactory
77% believed the exercise helped them assess their firm’s busine77% believed the exercise helped them assess their firm’s business continuity capabilitiesss continuity capabilities
All of the participating firms agreed to participate in future iAll of the participating firms agreed to participate in future industryndustry--sponsored exercisessponsored exercises
20042004 –– U.S. Securities Industry Tabletop ExerciseU.S. Securities Industry Tabletop Exercise

Date:Date: Initiated by SIA in 2003 and conducted throughout 2004Initiated by SIA in 2003 and conducted throughout 2004
(Separate test was held for futures by FIA on 9(Separate test was held for futures by FIA on 9thth October 2004 involving 90 firms, 6 exchanges, 5October 2004 involving 90 firms, 6 exchanges, 5
clearing houses and key service providers)clearing houses and key service providers)
Sponsors:Sponsors: SIA (equities and options) & FIA (futures)SIA (equities and options) & FIA (futures)
Scope:Scope:
Testing involved connecting from securities firm’s backup site(sTesting involved connecting from securities firm’s backup site(s) to primary and secondary sites of) to primary and secondary sites of
the exchanges and industry utilities (voluntary basis)the exchanges and industry utilities (voluntary basis)
Testing involved connecting to the:Testing involved connecting to the:
Securities Industry Automation Corporation (SIAC) used by the NYSecurities Industry Automation Corporation (SIAC) used by the NYSE and AMEX for preSE and AMEX for pre--tradetrade
and postand post--trade processingtrade processing
Depository Trust and Clearing Corporation (DTCC)Depository Trust and Clearing Corporation (DTCC)
NASDAQNASDAQ
Options Clearing Corporation (OCC)Options Clearing Corporation (OCC)
ParticipantsParticipants::
Approximately 177 firms in total (testedApproximately 177 firms in total (tested
with at least one component)with at least one component)
Outcome:Outcome:
Above average participationAbove average participation
Improved coordination and recovery capability between firms andImproved coordination and recovery capability between firms and exchangesexchanges
76%76%60%60%56%56%60%60%76%76%
% of Top 25 Firms% of Top 25 Firms
Completing Phase 1Completing Phase 1
19191515141415151919
Top 25 FirmsTop 25 Firms
Completing Phase 1Completing Phase 1
52525656343454545555
Total Number ofTotal Number of
Firms CompletingFirms Completing
Phase 1 TestingPhase 1 Testing
OCCOCCNASDAQNASDAQ
SIACSIAC
TradingTrading
SIACSIAC
Post TradePost Trade
DTCCDTCC
20042004 –– Industry Wide Business Continuity Phase 1Industry Wide Business Continuity Phase 1
Connectivity TestsConnectivity Tests

Date: April 4 – 8, 2005
Sponsor: U.S. Treasury and Department of Homeland Security
Objective:
TopOff 3 – Atlantic Blue, a national emergency preparedness exercise. Real time exercise:
engaging public sector first responders, emergency managers, health care organizations, firms,
exchanges, utilities, regulators, etc. Regulators test their alert mechanisms and emergency calls
with the financial services sector
Test conducts from April 4–8, 2005, and includes:
Connecticut: chemical attack and an explosive device,
New Jersey: biological attack, &
Washington, D.C
Security Industry validates the crisis alert processes, emergency conference call sequences (call
sequences also named the “call matrix”) & intra/inter-sector coordination
Participants
Largest National Full-Scale Exercise – 9,000 participants
Test Comments
The securities industry test portion was conducted on April 5
Overall was very successful and the industry is confident that the crisis coordination process that
was tested will be effective in a real event
Generally the Private sector organizations need more involvement in the planning process for these
types of exercises. These exercises are driven by the public sector and still are heavily weighted
toward public sector response capabilities
“TopOff 3” Exercise“TopOff 3” Exercise

Sponsors:Sponsors: SIA, TBMA, FIA, & FIFSIA, TBMA, FIA, & FIF
ScopeScope
Expanded on prior system connectivity tests, included componentsExpanded on prior system connectivity tests, included components for equities, fixed income,for equities, fixed income,
options, futures trading and settlementoptions, futures trading and settlement
During the test, firms and service bureaus accounting for more tDuring the test, firms and service bureaus accounting for more than 80% of the market’s normalhan 80% of the market’s normal
order volume connected simultaneously using backup data centers,order volume connected simultaneously using backup data centers, backup communications links,backup communications links,
alternate trading sites and alternate operations facilities to palternate trading sites and alternate operations facilities to place test orders, receive simulatedlace test orders, receive simulated
executions and conduct settlement interactionsexecutions and conduct settlement interactions
Test did not simulate an outage in any specific geographic area,Test did not simulate an outage in any specific geographic area, instead, all firms connectedinstead, all firms connected
simultaneously from their backup business and technology sites tsimultaneously from their backup business and technology sites to the markets and industry utilitieso the markets and industry utilities
ParticipationParticipation
Over 150 firms (testedOver 150 firms (tested with at least one component)with at least one component), 4 service bureaus and 30 exchanges, markets and, 4 service bureaus and 30 exchanges, markets and
utilities participatedutilities participated
Test OutcomeTest Outcome
Many firms tested with 20 or more exchanges/markets; more than 5Many firms tested with 20 or more exchanges/markets; more than 550 test connections between50 test connections between
individual firms and exchanges/markets; for the test as a whole,individual firms and exchanges/markets; for the test as a whole, issues were encountered on aboutissues were encountered on about
5% of the test connections5% of the test connections
Vast majority of issues were resolved between the firms and exchVast majority of issues were resolved between the firms and exchanges during the testanges during the test
Issues encountered were primarily connectivityIssues encountered were primarily connectivity--related (incorrect IP addresses, firewall settings,related (incorrect IP addresses, firewall settings,
etc.)etc.)
1515thth October 2005 Industry Wide Business Continuity TestOctober 2005 Industry Wide Business Continuity Test

Overall Test ProcessOverall Test Process
•• Start the registration earlyStart the registration early
•• Plan for front to back integrated test (from exchanges to utilitPlan for front to back integrated test (from exchanges to utilities service providersies service providers
allowing for the identification of gaps of critical relationshipallowing for the identification of gaps of critical relationships between all parties)s between all parties)
•• Standardized approach, as much as possible, to testing which incStandardized approach, as much as possible, to testing which includes test scripts,ludes test scripts,
instructions, test symbols/stocks, test trade date and closing pinstructions, test symbols/stocks, test trade date and closing proceduresrocedures
•• Allow clients to connect from either DR or production sitesAllow clients to connect from either DR or production sites
•• Subsequent tests should provide ways for firms to conduct theirSubsequent tests should provide ways for firms to conduct their own more extensiveown more extensive
internal tests in conjunction with the industry testinternal tests in conjunction with the industry test
Internally for FirmsInternally for Firms
•• Ensure procedures, inEnsure procedures, in--house infrastructure and systems are well documented andhouse infrastructure and systems are well documented and
kept currentkept current
•• Preparation for the test must be fully supported by all areas inPreparation for the test must be fully supported by all areas involvedvolved
1515thth October 2005 TestOctober 2005 Test

1414thth
October 2006 Annual Industry Wide Business Continuity TestOctober 2006 Annual Industry Wide Business Continuity Test
Date: 14th October 2006, 9:00 a.m. to 4:00 p.m. EST (US Eastern Standard Time)
Sponsors: SIA, TBMA, FIA, & FIF
Scope:
Expanded version of 15th October 2005 BCP Industry Test. Add new components: Fixed Income
(Include Money Market Instruments and more Buy Side involvement), Payment Systems and
Market Data Providers
Exercise and verify the ability of firms, markets and utilities to operate through an emergency
using backup sites, recovery facilities and backup communications capabilities across the industry
Again this test will not simulate an outage in any specific geographic area. Instead, all firms will
connect simultaneously from their backup business and technology sites to the markets and
industry utilities
This is a test of market connectivity that includes some processing interactions but is not a full test
of internal systems of firms and exchanges
Participants:
The same turn out is expected as in 2005: Over 150 firms, 4 service bureaus and 30 exchanges,
markets and utilities plus more involvement on the buy side
Note: Additional Test Information Provided in Annex

Infectious Disease Task Preparedness ForceInfectious Disease Task Preparedness Force
In the U.S., several major industry associations including theIn the U.S., several major industry associations including the
SIA and TBMA are working closely with industry regulators,SIA and TBMA are working closely with industry regulators,
exchanges, major financial organizations and localexchanges, major financial organizations and local
governments to coordinate preparations and responses togovernments to coordinate preparations and responses to
infectious disease events.infectious disease events.
Major ObjectivesMajor Objectives
•• Develop and share best practices in connection withDevelop and share best practices in connection with
precautionary measures and response proceduresprecautionary measures and response procedures
•• Model specific scenarios to review and validate industryModel specific scenarios to review and validate industry--
wide responseswide responses
•• Ensure that the SIA/TBMA command center is prepared toEnsure that the SIA/TBMA command center is prepared to
mobilize and coordinate industry responses to potentialmobilize and coordinate industry responses to potential
outbreaksoutbreaks

Explore InterExplore Inter--regional Industry Collaboration Opportunities onregional Industry Collaboration Opportunities on
Business Continuity and Crisis Management InitiativesBusiness Continuity and Crisis Management Initiatives
For example:For example:
Expansion of the Infectious Disease Preparedness Task ForceExpansion of the Infectious Disease Preparedness Task Force
Observe Industry Wide Tests in Other CountriesObserve Industry Wide Tests in Other Countries
Expansion of Current Industry Command Center and Crisis CommunicExpansion of Current Industry Command Center and Crisis Communicationsations
Structures with Other CountriesStructures with Other Countries
(continued)(continued)

Questions and AnswersQuestions and Answers
Joseph SackJoseph Sack
jsack@bondmarkets.comjsack@bondmarkets.com
+1+1--646646--637637--92659265
Greg FerrisGreg Ferris
gregory.ferris@morganstanley.comgregory.ferris@morganstanley.com
+1+1--973973--401401--42754275
Peter PoulosPeter Poulos
peter.poulos@creditpeter.poulos@credit--suisse.comsuisse.com
+1+1--212212--538538--31803180
Additional questions may be sent to:Additional questions may be sent to:

Annex

SECURITIES INDUSTRY
BUSINESS CONTINUITY TEST
Saturday, October 14, 2006
Coordinated by
Securities Industry Association
The Bond Market Association
Futures Industry Association

TEST OVERVIEW
The annual securities industry business continuity test
Test Date: Saturday, October 14, 2006
Objective: Exercise and verify the ability of firms, markets
and utilities to operate through an emergency using backup
sites, recovery facilities and backup communications
capabilities across the industry
This test will not simulate an outage in any specific
geographic area. Instead, all firms will connect
simultaneously from their backup business and technology
sites to the markets and industry utilities
This is a test of market connectivity that includes some
processing interactions but is not a full test of internal
systems of firms and exchanges

Test components:
Equities
Fixed Income
Options
Futures
Settlement
Payment Systems (new in 2006)
Market Data (new in 2006)
Firms will transmit dummy orders to markets and receive
simulated execution reports and will conduct certain
settlement and payment interactions.
SIA will compile and publish aggregate test results based
on input from exchanges. Results for individual
participants will remain strictly confidential.
TEST SCOPE

TEST FORMAT
An overall testing window will be open from 9:00 a.m. to 4:00
p.m. EST on 10/14. Individual exchanges and markets will
open their test windows within the 9:00 – 4:00 window
Exchanges and markets will provide time for pre-test setup prior
to the test windows
Firms will submit two orders for each of several designated
symbols on each exchange/market using real symbols and real
accounts
Firms will receive execution reports from the exchanges
Firms will conduct specified interactions with settlement and
payment entities
Pricing data and symbols to be used for each market will be
provided to participants prior to the test
Exchanges and markets will purge all test date from systems
prior to Monday market opening

EXCHANGE AND MARKET PARTICIPANTS
Equities
NASDAQ
AMEX
INET
Philadelphia Stock Exchange
NYSE
SIAC
Options
The Options Clearing Corporation
American Stock Exchange LLC
Chicago Board Options Exchange
International Securities Exchange
Pacific Exchange
Philadelphia Stock Exchange
Boston Options Exchange
Payment Systems
Fed Wire
SWIFT
Fixed Income
Alternative Trading Systems
Bloomberg BondDesk TradeWeb
MarketAxess The Municenter
Inter-Dealer Brokers
eSpeed ICAP
Clearing Banks
Bank of New York JP Morgan Chase
Futures
CBOE Futures Exchange Chicago Board of Trade
Chicago Mercantile Exchange Eurex US
New York Board of Trade The Clearing Corp.
New York Mercantile Exchange New York Clearing Corp.
DTCC
Market Data
Bloomberg
Reuters

GENERAL TEST REQUIREMENTS
WHO MAY PARTICIPATE?
The test is open to all securities firms providing they have pre-tested
communications links from the backup locations they will use during the test
through to the exchange and industry utilities sites.
WHAT BACKUP SITES ARE TO BE USED?
The objective of the test is to have all participants operate from their backup
locations to the greatest degree possible. It is intended that firms will activate 1)
backup data center, 2) operations and 3) trading sites.
WHAT STAFF IS REQUIRED FOR THE TEST?
Each participating organization will determine the number of employees
necessary to conduct the test. There is no minimum or maximum staff size
but, in keeping with the intent of the test, it is suggested that each firm assigned
assign some staff to 1) backup data center, 2) operations and 3) trading sites.

HOW DOES AN ORGANIZATION REGISTER FOR THE TEST?
An online registration system will be available on the SIA website by early August.
Registrations must be submitted through this system by close of business Friday,
9/15/2005
CAN FIRMS PARTICIPATE IN THE TEST THROUGH SERVICE BUREAUS?
ADP, Thomson BETA Systems, Sungard and Royal Blue are expected to
participate. Clients of these service bureaus may participate providing that they
have tested connectivity from their backup sites to the service bureau backup sites
prior to the 14 October’s test
WILL REGULATORS AND THE PRESS BE INVOLVED IN THE TEST?
Regulators will not participate directly in the test but, of course, have a significant
interest in the overall results. SIA, TBMA and FIA will brief the regulators prior to,
during and after the test regarding the test process and the aggregate results. The
press is not permitted to observe the test. SIA, TBMA and FIA will hold joint press
briefings, issue press releases and conduct press interviews prior to and after the
event

Final Detailed documentation will be posted on the SIA website at:
http://www.sia.com/business_continuity/html/testing.html
TEST INSTRUCTIONS

2006_London_Risk_Mgmt_Expo_BCP

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