Even with prep, did Wall Street's business continuity plans fail?
IDC report slams regulators and stock exchanges
Computerworld - Hurricane Sandy exposed a decided lack of contingency planning on Wall Street, according to a report by a research firm.
With the Northeast still experiencing the effects of widespread storm damage, the business continuity plans of stock exchanges and financial services companies will continue to be put to the test in the days to come, IDC Financial Insights stated in a report released Tuesday.
Megastorms like Sandy, which may become more common in the future, are good reminders of the need to double-down on business continuity planning, the report said.
"Not only has Sandy exposed the susceptibility of the contingency plans devised by major market players (exposing a lack of foresight concerning the potential impact of a hurricane that can simultaneously hit the [New York-Connecticut-New Jersey] area), but it has also given insight into [financial market regulators'] apparent inability to monitor electronic markets," IDC stated.
For the first time since the Sept. 11, 2001, terrorist attacks, the New York Stock Exchange voluntarily shut down for two straight days, opening again on Wednesday. As of Friday of last week, the exchange had planned to remain open throughout the storm.
IDC Financial Insights faulted the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, saying the industry watchdogs were "all too happy for stock markets to shut down completely," making it clear that the regulators had little confidence in their ability to police an entirely electronic market.
According to IDC Financial Insights, "there is little evidence to suggest that business continuity plans across Wall Street have so far stood up to such [difficult] conditions."
For the past three years, the NYSE Euronext stock exchange has had a contingency plan -- known as "Print as N" -- which in the event of a disaster allows it to remain open as an electronic-only operation using its Archipelago (Arca) Exchange communications network. However, the NYSE changed those plans after talking to regulators and investment firms.
The exchange chose to shut down out of concerns about fairness -- it wasn't sure all traders would be able connect to the Arca network, according to an NYSE spokesman, who added that officials were also concerned about customer safety.
The NYSE's "Print as N" plan calls for using Arca as the primary market, filtering NYSE trades through it using the letter 'N' to designate NYSE transactions.
At no time were any of the NYSE's data centers offline because of the storm, the spokesman said. The exchange could have remained open had it chosen to do so, but it chose the path of common sense instead, the spokesman said.
The SEC could not be reached for comment at deadline.
"The systems were fine -- it was getting people to run the systems that was the issue, which in of itself is also an issue, as they were unwilling to run without human intervention," IDC Financial Insights analyst Marc DeCastro stated in an email response to Computerworld.
However, IDC's report criticized the NYSE's contingency plan, "or as it turns out, the lack of a continuity plan," for such a natural "black swan" event, because the plan called for the stock market to operate "as an electronic-only exchange for the first time in its history."
"Keeping the market open on a purely electronic basis, with the market having never operated this way even under perfect conditions, would only increase the chance of any minor malfunction to a high-frequency trading algorithm, causing potentially great disruption," IDC wrote.
- 18 Hot IT Certifications for 2014
- CIOs Opting for IT Contractors Over Hiring Full-Time Staff
- 12 Best Free iOS 7 Holiday Shopping Apps
- For CMOs Big Data Can Lead to Big Profits
- Slideshow: 5 ways to lock down your mobile device
- Slideshow: 10 mistakes companies make after a data breach
- How to rob a bank: A social engineering walk through
- Which smartphone is the most secure?
China says to Chiang Kai-shek all Bitcoins at the door.
China marches long and hard over internal financial institutions, proclaiming that Bitcoins "should not and cannot be used as a currency". The news sent Bitcoin exchanges into a dive like cormorants in the deep China Sea. But all is not lost -- or is it? Bitcoins have been bubbling back to the surface, or has China's stance drained all enthusiasm? In IT Blogwatch, fearless leaders and bloggers quote pearls of wisdom from the little red book of Bitcoin. Not to mention: Financial advice from Whiz and Ice...
- IT Certification Study Tips
- Register for this Computerworld Insider Study Tip guide and gain access to hundreds of premium content articles, cheat sheets, product reviews and more.
- Make or Break: New Auto Products Must Go To Market On Time
- This Webcast quantifies the value of time to market for the auto industry and highlights how Primavera Enterprise Portfolio Management can help organizations.
- Stock Shock: The effect of project and portfolio management on share price
- In this independent report, you'll see the intrinsic connection between long-term capital investment and short term market performance -- and how this can...
- Hedge Your Bets
- This report explains how visibility and increased governance is key to reducing risk.
- In the Firing Line
- CEOs Are Increasingly Being Held Accountable; How susceptible is the CEO's reputation to poor performance across the project portfolio?
- The CISO's Guide To Virtualization Security
- This guide describes the security challenges within virtualized environments and shows how to apply the concepts of Forrester's Zero Trust Model of information... All Financial IT White Papers
- Live Webcast Research Report: The Big Data Opportunity for HR and Finance If CEOs, CFOs, CIOs, and CHROs want to drive their businesses forward, they will need to quickly recognize the enormous value of big...
- Live Webcast The Freedom to Run Your Business Your Way Vendors are challenged to create flexible systems that customers can tailor to particular business strategies and industry needs. But the flexibility should not...
- Live Webcast The Business Value of Human Capital Management for Finance View now >>
- HR and Finance Were made for Each Other View now >>
- The Value of Human Capital for Finance Professionals View now >>
- The Business Value of Human Capital Management for Finance View now >>
- The Freedom to Run Your Business Your Way Vendors are challenged to create flexible systems that customers can tailor to particular business strategies and industry needs. But the flexibility should not...
- Research Report: The Big Data Opportunity for HR and Finance If CEOs, CFOs, CIOs, and CHROs want to drive their businesses forward, they will need to quickly recognize the enormous value of big...
- All Financial IT Webcasts
Computerworld's Best Places to Work in IT 2013 list featured Quicken Loans, Securian, Vanguard and other top finance organizations. Honorees say the distinction helps them recruit top talent and boost staff morale.
Want to join this elite group? Nominate your organization for our 2014 list.