Teams of business continuity, technology, and operations professionals representing Wall Street’s largest broker-dealers put their disaster recovery plans to the test as they reacted to a scenario in which Manhattan becomes the scene of two bombings.

The exercise, which was held on May 18, was a joint effort of the Securities Industry Association and The Bond Market Association, and involved 13 large broker-dealers. The Securities and Exchange Commission, the New York Stock Exchange and Nasdaq Stock Market, data providers, industry utilities, utility providers, and government agencies also participated in the exercise.

The teams were presented with a multi-stage scenario that began with an isolated explosion in midtown Manhattan, which then escalated to a second explosion in the financial district, damaging facilities, disrupting transportation, and temporarily closing the markets.

At each stage, the participants determined which elements of their firm’s business continuity plan they would activate, including communication to employees and the public, evacuation of offices and data centers, and activation of back-up sites. They also were able to evaluate how well their response was coordinated with the industry-wide efforts.

After the third and final stage, each group presented a status report indicating its level of preparedness for the market opening the next day.

“The securities industry has worked continuously since September 11 to minimize the impact any emergency situation would have on the markets,” said SIA executive vice president Donald Kittell, in a news release. “And our reaction to events since then has demonstrated our commitment to both the safety of our employees and to ensure that our capital markets open for business as soon as possible after an emergency.”

“The exchange of ideas and questions raised at the exercise will help each firm, and the industry itself refine its disaster recovery plans. This exercise underscored the value of a broad, strong partnership involving broker-dealers, markets, utilities, regulators, and other government agencies,” Kittell said.

“The Bond Market Association has worked tirelessly with many partners, including regulators, the SIA and other market participants, to make sure financial markets can continue to function in the event of an emergency and fill their vital role in sustaining the global economy,” commented Joseph Sack, executive vice president of the BMA. “The tabletop exercise is merely one step, albeit an extremely important one, in a long series of steps taken to prepare our markets for any emergency.”

The SIA’s Business Continuity Planning Committee and the BMA’s Business Continuity Management Council, which coordinated the exercise, plan to follow up with additional tabletop exercises later in the year.