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News November 7, 2005 Issue

NYSE Issues Guidance on Business Continuity Plan Testing

An Information Memo recently issued by the NYSE may be of interest to advisers looking to test their business continuity plans.

The exchange adopted a formal BCP requirement last year, NYSE Rule 446. Although not explicitly required by the rule, the NYSE has taken the position that "good business practice" dictates that a firm test its BCP.

The recent memo describes how NYSE examiners will evaluate a firmís BCP testing. For example, they will look at the frequency of testing, the types of tests that have been performed, the extent of employee participation in the tests, whether management has been informed of the results, and whether corrective actions were taken or modifications made. Effective testing, said the NYSE, could be done internally, by hiring a "qualified" third party, and by participating in organized industry-wide testing days.