FINRA Issues Notice on Pandemic-Related Business Continuity Planning
Due to the recent outbreak of coronavirus disease (COVID-19), the Financial Industry Regulatory Authority has issued a notice reminding firms to consider business continuity planning in the event of a pandemic in the United States.
Due to the recent outbreak of coronavirus disease (COVID-19), the Financial Industry Regulatory Authority has issued a notice reminding firms to consider business continuity planning in the event of a pandemic in the United States. The notice also provides pandemic-related guidance and certain regulatory relief to member firms.
FINRA Rule 4370 requires firms to create a business continuity plan that identifies procedures relating to an emergency or significant business disruption. The rule also requires firms to provide emergency contact information to FINRA, including the designation of two emergency contacts.
FINRA said that firms may consider employing methods such as social distancing, travel restrictions, revised sick leave policies, special pandemic leave time, or specialized seating plans for densely populated floors or buildings.
FINRA also warned of potential increased risk of cyberattacks due to the use of remote offices and suggested certain steps that could be taken to protect against such attacks. These include ensuring that virtual private networks and other remote systems are properly patched with available security updates; checking that system entitlements are current; employing the use of multi-factor authentication for associated persons who access systems remotely; and providing cyber risk education and other exercises that promote heightened vigilance.
FINRA noted that firms may experience increased customer call volumes or online account usage during a pandemic which can cause temporary operational challenges. If registered representatives are unavailable to service their customers, FINRA encourages firms to place a notice on their websites informing customers who they may contact concerning the execution of trades, their accounts, and access to funds or securities.
FINRA is temporarily suspending the requirement to maintain updated Form U4 information regarding office of employment address for registered persons who temporarily relocate due to COVID-19. In addition, member firms are not required to submit branch office applications on Form BR for any newly opened temporary office locations or space-sharing arrangements established as a result of recent events.
Any affected person who has a qualifications examination or continuing education window that is due to expire is encouraged to contact FINRA regarding an extension.
Depending on the nature and impact of the COVID-19 outbreak, FINRA may provide additional, specific regulatory relief and guidance in the future.
