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FINRA Affirms Business Continuity Rule

Following a rule review, FINRA decided to maintain Rule 4370 ("Business Continuity Plans ("BCP") and Emergency Contact Information"). The rule "requires a member firm to create, maintain, review at least annually and update upon any material change, a written BCP identifying procedures relating to an emergency or significant business interruption."

During the rule review, FINRA considered the costs and benefits associated with creating, maintaining, or updating a BCP. Under separate notices, FINRA also solicited feedback on pandemic-related issues concerning remote work and alternative work arrangements. Stakeholders reported that Rule 4370 worked well. FINRA found that "the rule's flexible, non-prescriptive, and risk-based approach has been effective in ensuring firms of all sizes are prepared for potential business disruptions."

As part of the feedback from the retrospective and pandemic review, FINRA is "considering modifications to firms’ obligations under Rule 3110(c) ("Supervision - Internal Inspections") and the current framework for defining offices as an Office of Supervisory Jurisdiction, branch office or non-branch location under Rule 3110(f) ("Supervision - Definitions")."

Primary Sources

  1. Regulatory Notice 21-44: Business Continuity Planning and Lessons From the COVID-19 Pandemic

  2. COVID-19 Webpage

 

© Copyright 2022 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume XI, Number 357
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