On April 7, 2004, the Securities and Exchange Commission approved NASD Rule 3510 and 3520 and NYSE Rule 446, which requires member firms to create and maintain business continuity plans. In accordance with these rules, a business continuity plan is a plan that will enable the firm to continue its business in the event of a significant business disruption or, in the alternative, conduct an orderly wind-down of operations.
On this page, clients and counterparties of AVM, L.P. ("AVM") will find information on AVM's commitment to these new obligations and highlights of our Business Continuity Program.
AVM, L.P. Business Continuity Program
Given the world's dynamic times, effective business continuity measures are critical for any business entity.
AVM is committed to protecting its staff and ensuring the continuity of critical businesses and functions in order to protect the firm, mitigate risk, safeguard revenues and sustain both a stable financial market and customer confidence. The development, implementation, testing and maintenance of an effective Business Continuity and Disaster Recovery Program are required to sustain these objectives.
Ten Critical Components
Our plans to ensure business continuity address ten key areas the NASD and NYSE stated must be addressed in a firm's plan:
- Data backup and recovery (hard copy and electronic) – identification of the location of primary books and records (hard copy and electronic) and the location of backup books and records. In addition, firms must be prepared to describe how they will recover data in the event of a significant business disruption.
- All mission-critical systems – systems that are necessary, depending on the nature of a member's business, to ensure prompt and accurate processing of securities transactions, including, but not limited to, order taking, order entry, execution, comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts and the delivery of funds and securities.
- Financial and operational assessments – written procedures that allow a firm to identify changes in its operational, financial, and credit risk exposures. Operational risk focuses on the firms' ability to maintain communications with customers and to retrieve key activity records through its "mission critical systems." Financial risk relates to the firm's ability to continue to generate revenue and to retain or obtain adequate financing and sufficient equity. Firms may also face credit risk (e.g., where its investments may erode from the lack of liquidity in the broader market), which would also hinder the ability of the firm's counterparties to fulfill their obligations.
- Alternate communications between customers and firm – alternate means of communications that a firm will use to communicate with its customers in the event of a significant business disruption.
- Alternate communication between firm and its employees – alternate means of communications that a firm will use to communicate with its employees in the event of a significant business disruption.
- Alternate physical location of employees – alternate locations must be designed for employees, including key personnel that have been identified to assist in the resumption of business operations.
- Critical business constituents, banks and counterparty impact – what impact will a significant business disruption have on a firm's relationship with its critical business constituents, banks and counterparties, and how will a firm deal with those impacts.
- Regulatory reporting – available means a firm can use to continue its compliance with regulatory reporting requirements.
- Communications with regulators – communication with regulators through whatever means are still available, including the designation of business continuity plan contacts with the NASD to assist in these communications.
- Providing customers prompt access to their funds and securities – measures a firm will use to make customer funds and securities available to customers in the event of a significant business disruption.