U.S. securities regulators have proposed new rules that would require critical market infrastructure organizations to ensure that their systems are up to snuff.
The U.S. Securities and Exchange Commission (SEC) unanimously proposed new rules on Thursday to require certain key market participants — including self-regulatory organizations, alternative trading systems, and clearing agencies — to have comprehensive policies and procedures in place surrounding their technological systems.
Coming in the wake of the flash crash and other recent technology-driven market disruptions, the proposed rules would replace the current voluntary compliance program with enforceable rules that, the SEC says, are “designed to better insulate the markets from vulnerabilities posed by systems technology issues.”
The proposals would require these firms to carefully design, develop, test, maintain, and monitor systems that are integral to their operations. They would also require them to ensure their core technology meets certain standards, to conduct business continuity testing, and to provide notifications to the SEC in the event of systems disruptions and other events.
“While it’s not possible to prevent every technological error that market participants may commit, we must ensure that our regulations are designed to minimize their impact on our markets and ultimately investors,” said SEC chairman, Elisse Walter. “[The proposed new rules] would provide more explicit technology and control standards to help ensure that our markets remain resilient against technological vulnerabilities.”
The proposals will be open for a 60 day comment period.