Stock Exchanges Pay $14 Million Fine for Weak Backup Procedures
The SEC fined the three affiliated exchanges $14 Million for failing to implement required business continuity and disaster recovery procedures and other compliance violations uncovered during significant market disruption events. The SEC charges that the exchanges violated Regulation SCI, adopted in 2014, because it relied on backup affiliate systems rather than ensure reasonably designed backup and recovery capabilities. The SEC also charged the exchanges with making misrepresentations during market disruptions and wrongly implementing trading halts.
OUR TAKE: Advisers and Broker-Dealers also must implement reasonable business continuity and disaster recovery procedures. If the SEC will bring charges against national exchanges, expect scrutiny during exams.