Practice Note 2.6.6 — Business Continuity Requirements
Issue Date Cross Reference Enquiries Added on
22 January 200922 January 2009 and
1 April 20141 April 2014.
Rule 2.6.6 Please contact Member Supervision:
Facsimile No : 6538 8273
E-Mail Address: email@example.com
1. Introduction1.1 Rule 2.6.6 requires Members to:(i) maintain adequate business continuity arrangements;(ii) document business continuity arrangements in a business continuity plan;(iii) test and review business continuity plans regularly; and(iv) appoint emergency contact persons.1.2 The objective is to ensure that Members have the ability to:(i) React swiftly to emergency situations; and(ii) Maintain critical functions and fulfill obligations to customers and counterparties in the event of major operational disruptions.
2. Business Continuity Plan2.1 Critical Elements of a Business Continuity Plan2.1.1 Rule 2.6.6(a) requires Members to maintain adequate business continuity arrangements, and document such arrangements in a business continuity plan. As a guide, a Member's business continuity plan should document the following elements:(i) Risk assessment: This includes a comprehensive assessment of business continuity risks (including financial and operational risks) and threat scenarios which may severely disrupt a Member's operations. Such scenarios may include prolonged power outages, IT system software or hardware failures, loss of voice or data communication links, acts of terrorism, and outbreak of infectious diseases;(ii) Business impact analysis: This is an evaluation of the impact of the risks and threat scenarios identified in (i) above. The business impact analysis should identify critical business functions (including support operations and related information technology systems) and potential losses (monetary and non-monetary) to enable the Member to determine recovery strategies/priorities and recovery time objectives;(iii) Work area recovery: This refers to continuity arrangements for a Member's critical functional capabilities in the event that the Member's primary office becomes inaccessible, for example, availability of a disaster recovery site ready for activation within a reasonable period of time;(iv) Crisis communications: This refers to a communications plan for the Member to liaise with its internal and external stakeholders such as employees, customers and regulatory authorities during a crisis;(v) Roles and responsibilities: This refers to the identification of a Member's key personnel and management staff, their roles and responsibilities, and reporting lines. Alternates should be identified to cover the responsibilities of absent key personnel.(vi) Backup for critical functions*, information technology systems and data;
* Critical functions refer to business functions whose failure or disruption may incapacitate the firm.(vii) Key service providers^: This refers to assessing a Member's dependencies on key service providers in recovery strategies and recovery time objectives, and taking steps to ensure that key service providers are capable of supporting the Member's business, even in disruptions;
^ Key service providers refer to third-parties who are performing functions that are not normally carried out by Member firms internally, but are critical to Member firms' ability to carry on business operations. For example, IT system hardware/software vendors.(viii) Outsourcing service providers#: This refers to assessing whether the service provider has established satisfactory Business Continuity Plans commensurate with the nature, scope and complexity of the outsourced services; and
# Outsourcing service providers refer to third parties who are performing functions that would normally be performed by Members firms internally. For example, Operations and Technology.(ix) Any other elements that the Member deems necessary to be included in its business continuity plan or which the Exchange may prescribe from time to time.2.2 Emergency Response During Crisis2.2.1 A Member should establish and maintain a crisis management plan as part of its business continuity plan. The crisis management plan should include (but not be limited to):(i) Emergency response procedures;(ii) Roles and responsibilities of the crisis management team;(iii) Command and control structures; and(iv) Salvage and restoration procedures.2.2.2 The Exchange may declare a wide-area crisis in the event of a major and widespread incident. When such declaration is made, the Exchange may require a Member to submit status reports to the Exchange. A wide-area crisis may include any incident where the operations of a large number of market participants are disrupted simultaneously.2.3 Regular Review, Testing and Training
2.3.1 Rule 2.6.6(d) requires a Member to review and test its business continuity plan regularly. Members should do so at least once a year to ensure that their business continuity plans remain relevant.2.3.2 Where there are material changes to a Member's business activities and operations, the Member should update its business continuity plan accordingly. Regular training should be conducted for staff to be updated and aware of any relevant changes to the Member's business continuity arrangements. As a principle, training should be conducted when:(i) changes have been made to the Member firm's BCP; and(ii) new staff are recruited.Member firms should also conduct refresher courses for existing staff where appropriate.2.4 Application to a General Trading Member that holds a licence specified in Rule 2.4.1(b)2.4.1 The features of a business continuity plan set out in paragraphs 2.1, 2.2 and 2.3 may not be applicable to a General Trading Member that holds a licence specified in Rule 2.4.1(1)(b). The guidance for such Trading Members is set out in Practice Note 2.6.6; 3.3.3; 3.3.9; 3.3.10; 3.3.23.
3. Emergency Contact Persons3.1 Rule 2.6.6(e) requires a Member to appoint emergency contact persons and furnish the contact information of such persons to the Exchange. Members may appoint an emergency contact person and up to two (2) alternates. A template is attached as Appendix A to this Practice Note for the notification of contact information (postal address, email, telephone, mobile telephone and facsimile numbers) to the Exchange.
Refer to Appendix A of Practice Note 22.214.171.124.2 Members are to ensure that the contact information provided to the Exchange is updated on a semi-annual basis. Nonetheless, where there are changes to a Member's emergency contact persons and contact information, the Member should notify the Exchange immediately in writing.3.3 A Member's authorized emergency contact person should immediately notify the Exchange in the event where:(i) A Member's business operations are or will be significantly disrupted; and/or(ii) A Member's business continuity plan is activated.