FINRA Manual: Contents
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Year 2000 Update (November)
Are You Ready For The Year 2000?
As the Year 2000 approaches, most media reports and surveys indicate that businesses are making significant progress and will be well prepared for the century date change. However, there is still work that needs to be done. Organizations should continue to focus on maintaining a high level of readiness. One important way to achieve this is through the development and execution of a well-defined and tested contingency plan—meaning having a process to recover from mission-critical Year 2000 failures. Contingency plans should be designed to continually address the changes in status of package applications, application software development and upgrades, and vendors. All of these can impact business' readiness and should be closely monitored.
When developing your contingency plan you need to determine if your business should establish a contingency site (consider the costs involved when making this determination). For instance, if systems fail due to infrastructure-related issues, can the problem be resolved by moving the business function to another location? If the answer is yes, then you should consider establishing and testing this alternative site. The preparation of your contingency site must be continuously monitored for consistency with the primary sites to ensure ease of transition during the time of need. Broker/dealers that plan to prepare another location as a business contingency are not required to register the site as a branch office at this time. However, if the site is activated, firms are required to notify the National Association of Securities Dealers, Inc. (NASD®) with site information and may need to register the site as a branch office depending on the types of activities conducted at the site.1
In addition, it is important that investors are kept aware of your firm's level of readiness. Effective investor communication is critical to ensuring the industry's smooth transition into 2000. To help facilitate this for members, the NASD has implemented two products on its Web Sites for investors. First, investors can review NASD Member Year 2000 Readiness Statements submitted by NASD members. Under this program, members can post a voluntary Year 2000 readiness statement to the NASD and NASD Regulation, Inc. (NASD RegulationSM) Web Sites. Although the readiness statement is optional, we are encouraging members to participate.2 Second, the jointly developed securities industry Year 2000 Investor Kit provides educational information and practical guidance about the Year 2000 issue and is available for firms to distribute to customers.3
NASD Business Continuity Planning
The NASD Year 2000 Program Office has developed a Year 2000 Business Continuity Planning (BCP) Information Kit for members that is now available on the NASD and NASDR Web Sites (www.nasd.com or www.nasdr.com). Due to the confidential and proprietary nature of much of the information contained in these plans, the NASD cannot disclose them in their entirety. The BCP Kit contains general information about the NASD's Business Continuity Planning Program and specific business continuity information about NASD Regulation and Nasdaq® applications. If you have any questions about the information provided in the Kit, call the Year 2000 Program Office at (888) 227-1330.
1 Firms must notify the NASD of a change of address to a contingency site location which is a requirement of NASD By-Laws, Article IV, Section 8(b).
2 More information about the Member Year 2000 Readiness Statement Program and a sample letter that can be customized are available by visiting www.nasdr.com or calling (888) 227-1330. The NASD will be updating its Web Site with the letters on a regular basis through the end of the year.
3 Reprints of certain sections of the Investor Kit are available to send to customers either separately or with other mailings, such as customer statements. Refer to www.nasdr.com or www.nasd.com Y2K sections to review the Kit online, or call the Year 2000 Program Office at (888) 227-1330.
SIA And Securities Industry Contingency Planning Information
The SIA Contingency Planning Web Site is a central resource dedicated to the dissemination and communication of information pertinent to contingency and business continuity planning in the financial services industry. The Web Site, which is managed by the SIA Financial Services Coordination and Communication Center (FSCCC), is intended to provide financial services industry participants with timely and pertinent information that will assist them in preparing for the century date roll-over weekend. The Web Site is comprised of a public area and a private area. The public area is intended for non-registered users to access general information, documents, etc. The private area is intended for registered users to gain access to the FSCCC services. The SIA FSCCC document is available in the public area and is intended for use as a reference in understanding how the financial services industry is planning its communication strategy and how it expects to handle the flow of information during the transition to the Year 2000.
To access all areas of the SIA's Year 2000 Contingency Planning Web Site, a firm must first register as a user of this Web Site. To register, follow these steps:
- Go to the SIA Year 2000 Contingency Planning Web Site (www.siay2k.com/contingency).
- Under "Registration for FSCCC", click on Information.
- Scroll down to New Registrants, click on Registration Request.
- Complete steps 1, 2, and 3.
The SIA will contact firms with their registration information. For help registering, call the SIA at (888) Y2K-4SIA.
Millennium Transition Questionnaire
The Securities and Exchange Commission (SEC) has developed a uniform questionnaire (Millennium Transition Questionnaire) to gather specific information from selected broker/dealers during the Year 2000 transition. The Questionnaire will be implemented by self-regulatory organizations (SROs). Selected firms will be required to respond to the Questionnaire under procedures established by their designated examining authority (DEA).4
The Questionnaire is intended to identify any problems caused by the transition, provide updates of markets and market participants to regulators, and reinforce investor confidence.
Each DEA will collect information from its participating members once per day beginning December 29, 1999, three times per day beginning January 3, 2000, and then two times per day beginning January 5, 2000. We expect to discontinue the Questionnaire after the last report on January 7, 2000.
It is important to contact the NASD if your firm is having issues that could affect business operations over the Year 2000 transition period. Check the NASD's Year 2000 Web Pages for information during the transition weekend. The Web Pages will also contain links to other relevant industry status reports such as the SIA Contingency Planning Web Site.
4 This Questionnaire is required by the SEC, and implemented by the SROs. Selected clearing and market-making firms will submit responses at scheduled times throughout the transition period of December 29, 1999 - January 7, 2000.
Year 2000 Countdown
As 1999 winds down, Year 2000 issues will receive increased attention as companies in virtually every industry accelerate efforts to meet Year 2000 deadlines. During this critical period, the securities industry will heighten its focus on regulatory compliance, investor communication, Year 2000 testing, and contingency planning. All broker/dealers should be aware of Year 2000-related dates and events noted below. Following these specific dates and events are general guidelines to help firms complete their readiness efforts.*
|November 5, 1999: Submit your firm's Member Year 2000 Readiness Statement to be included on the NASD Web Site listing available to investors. See the NASD and NASDR Web Sites (www.nasd.com and www.nasdr.com) for more information.||November 12, 1999: The Securities Industry Association (SIA) Transition Conference, the SIA's final conference of the year, will detail the industry's Year 2000 plans for communications during the weekend of December 31, 1999 - January 3, 2000. It will provide information about contingency planning as well as interaction with key communication and coordination center personnel, regulators, and the industry over the transition weekend.||November 15, 1999: This is the final compliance date for the SEC Operational Capability Rule. Applicable firms should file their certification statements based on the "Guidance for Completion and Submission of Year 2000 Readiness Certification" found on the NASD Regulation Web Site (www.nasdr.com).||December 29, 1999 - January 7, 2000: Millennium Transition Questionnaire (MTQ). All participating firms will complete the MTQ as required and submit it to their DEA.|
In addition to the specified dates listed above, firms should follow the activity guidelines below (and refer to the following Year 2000 Education and Events schedule for more information on Virtual Workshops to be conducted by the NASD Year 2000 Program Office). These general activities should occur in the timeframe shown, and may vary depending on the size and complexity of the broker/dealer.*
- Complete legal reviews of Year 2000 plans and activities, including Year 2000 warranty information in contracts.
- Complete and fully test Year 2000 contingency plans to ensure functionality.
- Activate freeze dates for new software or hardware as applicable to prevent Year 2000 issues with newly implemented systems.
- Activate third-party contingency arrangements for any vendors or suppliers failing to show acceptable Year 2000 progress or readiness.
- Communicate with investors about Year 2000 readiness efforts by submitting a voluntary Member Year 2000 Readiness Statement. See the NASD and NASDR Web Sites (www.nasd.com and www.nasdr.com) for more information.
- For those firms identified as participants in the Millennium Transition Questionnaire, identify the key contact person.
December should be reserved for event management and final Year 2000 preparations. These include:
- Continuing focus on investor communication about the securities industry's readiness and your firm's readiness.
- Staffing and confirming activities over the course of the transition period, including required reporting of Market Maker and clearing firms to the NASD.
- Completing the Millennium Transition Questionnaire (selected firms only).
After the new year arrives, firms should begin focusing on:
- Millennium Transition Questionnaire.
- Leap year considerations to ensure continued success.
- Decimalization plans.
*Following these guidelines by themselves will not guarantee Year 2000 compliance.
Year 2000 Education And Events
The NASD Year 2000 Program Office is continuing to offer Virtual Workshops—conference call-in sessions. The NASD encourages registration for these sessions by calling (888) 567-0578. After placing the call, listen to the greeting, and provide the following information when prompted: firm name, Broker/Dealer #, and workshop date. On the day of the session, call (800) 857-7323 and indicate the password and confirmation number provided for the specific workshop. See below for a list of these specific workshops organized by date of session, as well as a brief summary of the issues to be discussed.
November 10 Contingency Planning and Reporting Requirements
Conf. #: 3117664
Issues to be covered:
- Developments in contingency planning trends
- Step-by-step guide to completing mandatory reporting to the SROs during the transition timeframes
- Global view
November 17 Risk Management
Conf. #: 3117677
Issues to be covered:
- Key principles in risk management
- What the NASD is doing to manage risk
- What clearing firms and introducing firms can do
- Review of seven areas that can affect your business operations
December 9 Millennium Transition Questionnaire (MTQ)
Conf. #: 3117691
Issues to be covered:
- Report submission requirements
- Reporting details
- Preview of MTQ Web application
December 14 Beyond Year 2000
Conf. #: 3117699
Issues to be covered:
- The Millennium—Doing business summary
- Record retention and maintenance issues
NASD Year 2000 Event Calendar
|Contingency Planning and Reporting Requirements||Virtual||Nov. 10||11:00 a.m., ET|
|Risk Management||Virtual||Nov. 17||11:00 a.m., ET|
|Millennium Transition Questionnaire (MTQ)||Virtual||Dec. 9||11:00 a.m., ET|
|Beyond Year 2000||Virtual||Dec. 14||11:00 a.m., ET|
NASD Year 2000
phone: (888) 227-1330
or visit the Year 2000