In testimony to the U.S. Congress, Nasdaq’s chief information officer today suggested that the move to electronic trading makes markets more able to withstand natural disasters and other large-scale disruptions.

Steven Randich, executive vp of operations and technology and CIO, spoke to the subcommittee on Government Management, Finance and Accountability about Nasdaq’s preparedness and the benefits of electronic trading networks in the event of wide-scale disaster or disruption. “The exchange model in the U.S. is evolving towards electronic trading, and this will enhance naturally the capital markets’ ability to withstand catastrophic events,” said Randich. ”Nasdaq’s operating model provides us with a natural and tremendous business continuity advantage.”

He explained that Nasdaq utilizes hundreds of geographically diverse and competing market makers who provide the trading liquidity for each security listed on the market. Randich added that its “open architecture” market structure places virtually no limit on the number of market participants that can provide liquidity on Nasdaq and places virtually no geographical restrictions on those market participants.

Randich also pointed out that Nasdaq was fully operational during and after the 9/11 attacks and during the major blackout that occurred in August 2003 in the northeastern US and Canada.

But he said it did find room for improvements after 9/11. ”We added more frequent testing to our backup site. Testing, which had been quarterly; was increased to monthly, and we selectively invite market participants to take part,” said Randich.

He also pointed to the development of a contingency plan that would see Nasdaq trade NYSE-listed stocks if the NYSE is ever unable to operate both its primary and backup systems. “Nasdaq is now able to trade all NYSE and AMEX stocks if their respective trading floors were rendered inoperative for an extended period of time. In effect, in the event of a catastrophic New York metro emergency, Nasdaq is fully capable of trading all 6,700 US securities listed on NYSE, AMEX, and Nasdaq on our geographically diverse and resilient network,” he said.

“The industry is irreversibly moving towards electronic trading, and this is good news for resiliency,” concluded Randich. “With electronic trading, an exchange need no longer be tied to a place. Rather, it can be maintained redundantly in multiple places and run by multiple systems, and redundancy is the key to security against any form of accident or attack. What is best for investors and for markets overall is also best for our financial and national security.”