SEC votes for more regulation in securities 24 November 2014Washington DC Reporter: Stephanie Palmer
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The US Securities and Exchange Commission (SEC) has voted to adopt new rules for compliance and integrity in securities markets.
Under Regulation Systems Compliance and Integrity (Regulation SCI), certain key market participants will have to take measures to reduce issues with systems and improve their resilience for when these issues do occur.
The rules will affect self-regulated organisations, some alternative trading systems, some plan processors and exempt clearing agencies. These companies will have to prove that they have comprehensive policies in place in case of technical failure.
Regulation SCI also provides a framework for companies to take corrective action when issues arise, and obliges them to provide notifications and reports on system changes, conduct business continuity testing and conduct annual reviews on automated systems.
Mary White, chair of the SEC, said: “The rules adopted today mark an historic shift in the commission’s regulation of the US securities markets that will better protect investors by requiring comprehensive new controls for the technological systems that form the core of our current markets.”
New measures come as a reaction to increased reliance on technology and automation in the securities sector. Technology failures can have significant impact and lead to losses for investors.
“The rules provide greater accountability for those responsible for our critical market systems, helping ensure that such systems operate effectively and that any issues are promptly corrected and communicated to market participants and the commission,” said White.
The rules become effective 60 days after they are published in the Federal Register, and from that date companies will have nine months to comply.
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