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Year 2000 Update (August)

August 1999

Broker/Dealer Day Zero Preparation

Over the weekend of January 1 and 2, 2000, broker/dealers will begin assessing the need to invoke their written contingency or disaster recovery plans. These plans should reflect potential scenarios that could be encountered duringthis unique transition. Firms will implement contingency and disaster recovery plans to the degree necessary to ensure a continuation of those business functions critical to maintain business as usual in the event of Year 2000-related problems.

A Year 2000 Contingency Plan should include the following:

1. Identification of primary business mission-critical functions.
2. Criteria for invoking the plan.
3. How long operations can continue in recovery mode.
4. Roles and responsibilities.
5. Assigning and reallocation of resources.
6. Procedures for returning to normal operating mode.
7. Procedures for recovering lost business events or data.
8. Criteria to abort the functions and relocate operations to a separate business continuity site.
9. Procedures to notify the National Association of Securities Dealers, Inc. (NASD®) of the new business continuity location.1
10. Scenarios and event plans that include a schedule of activities, dependencies, and resources.

Firms should prepare event scenarios to cover the loss of computers, telephones, building facilities, vendors, and electricity. The information below will assist firms in preparing scenarios by ensuring that answers and plans exist for each of the questions.

January 1, 2000 And January 2, 2000

1. Are key personnel in offices or available?
2. Are building locations accessible?
3. Are elevators and utilities operating?
4. Are all telephones, fax machines, and e-mail lines operational?
5. Are all computers, mainframes, and servers operational?
6. Are electronic links/connections operating?
7. Are you aware of any reports of industry or investor problems?

January 3, 2000 (1st Business Day)

1. Are key personnel in offices or available?
2. Are building locations accessible?
3. Are elevators and utilities operating?
4. Are all mission-critical trading and settlement systems up and running?
5. Are all telephones, fax machines, and e-mail lines operational?
6. Are all computers, mainframes, and servers operational?
7. Are order/entry/trading systems operating?
8. Are trade processing and overnight batch process operating?
9. Are connections to service bureaus operational?
10. Are pricing systems up and running?
11. Are connections to markets operational?
12. Were access and connections to clearing and settlement organizations made?
13. Does the firm have access to banks, fedwire, and other money mobilizations?
14. Are connections to foreign locations running?
15. Can the firm receive data from vendor links?

January 3, 2000 (End of Day)

1. Were there any business disruptions?
2. Did end-to-day processing run properly?
3. Were there any problems reported?

Footnote

1 Broker/dealers with plans to prepare another location as a business contingency site as part of their contingency plans do not have to register the site as a branch office at this time. However, if the site is activated, firms will be required to notify the 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.

Business Continuity Sites

If your business systems fail due to infrastructure-related issues that can be resolved by moving to a business continuity site, then such a site should be created and tested. The preparation of these sites must be continuously monitored for consistency with the primary sites to ensure ease of transition at the time of use.

Each self-regulatory organization (SRO) will be collecting information about its clearing and market-making members during this transition period. The Securities and Exchange Commission (SEC) is coordinating these efforts to minimize the numbers of parties collecting firm information at any one point in time. We expect to be able to publish the standardized questionnaire and procedures for use later this month.

The NASD Year 2000 Readiness Statement Program

To assist in the effort of communicating to investors the industry's preparedness, the NASD Year 2000 Program Office is currently developing an area on the Internet for NASD member firms to display information related to their Year 2000 preparedness efforts. Each NASD member firm will be given the opportunity to provide a letter on its letterhead stating its level of readiness for the transition into Year 2000. This information will be available on the NASD and NASD Regulation® Web Sites (www.nasd.com and www.nasdr.com).

The NASD Year 2000 Readiness Statement Program is being instituted so that members may have an additional venue to communicate Year 2000 preparedness efforts to customers, the general public, and the securities industry. The securities industry expects the new year to be "business and usual," and this is a chance for member firms to convey that expectation to our shared constituents.

These Year 2000 member readiness statements will be available to the public by mid-October and members can continuously update their statements as they feel appropriate.

More information on the details of this program will be provided in upcoming communications to members.

More Information/Questions

NASD Year 2000 Program Office
e-mail: y2k@nasd.com
phone: (888) 227-1330

Year 2000 Education And Events

The NASD Year 2000 Program Office is continuing to offer Virtual Workshops—conference call-in sessions. The NASD strongly 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.

August 24   Contingency Strategies for Large Firms

Password: Strategies

Conf. #: 3117500

Issues to be covered:

  • Overview of typical large firm contingency planning challenges


  • Trends in contingency planning


  • Timeline vs. impact


  • External/internal contingency planning

Sept. 14   Certification of Year 2000 Compliance and SEC Rule 15b7-3T

Password: Certification

Conf. #: 3117560

Issues to be covered:

  • Certification and the Year 2000 issue


  • Latest developments in certification


  • Best practices for all types of firms

Sept. 21   Peer Review of Best Practices III

Password: Practices

Conf. #: 3117592

Issues to be covered:

  • A year review of the biggest challenges faced by broker/dealers of all sizes


  • Summary of the top 10 best practices to managing the Year 2000 issue

October 12   State of Utilities and Other Critical Services

Password: Utilities

Conf. #: 3117608

Issues to be covered:

  • State of utilities and recent guidelines


  • Other services


  • Possible impact on broker/dealers


  • Best practices in dealing with uncertainty

October 19   State of the Securities Industry

Password: Industry

Conf. #: 3117632

Issues to be covered:

  • Industry summary and overview


  • A look at clearing firms


  • A look at Market Makers


  • A look at introducing firms


  • In-depth look at where your firm should be in achieving Year 2000 readiness

October 26   Legal Review for Broker/Dealers

Password: Review

Conf. #: 3117647

Issues to be covered:

  • A review of legal issues for 1998 and 1999


  • Current broker/dealer trends reviewed


  • Checklist of what your firm may need to do with the little time remaining

November 2   Day Zero Preparations

Password: Day Zero

Conf #: 3117656

Issues to be covered:

  • Day zero scenarios - the new year


  • Broker/dealer strategic scenarios


  • Helpful hints on day zero

November 10   Contingency Planning and Reporting Requirements

Password: Trends

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

Password: Risk

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

NASD Year 2000 Event Calendar

Topic Location Date Time
Contingency Strategies for Large Firms Virtual Aug. 24 11:00 a.m., ET
Certification of Year 2000 Compliance and SEC Rule 15b7-3T Virtual Sept. 14 11:00 a.m., ET
Peer Review of Best Practices III Virtual Sept. 21 11:00 a.m., ET
State of Utilities and Other Critical Services Virtual Oct. 12 11:00 a.m., ET
State of the Securities Industry Virtual Oct. 19 11:00 a.m., ET
Legal Review for Broker/Dealers Virtual Oct. 26 11:00 a.m., ET
Day Zero Preparations Virtual Nov. 2 11:00 a.m., ET
Contingency Planning and Reporting Requirements Virtual Nov. 10 11:00 a.m., ET
Risk Management Virtual Nov. 17 11:00 a.m., ET

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