Business Continuity Plan Template for Small Introducing Firms

[Firm Name] Business Continuity Plan (BCP)

Updated May 12, 2010 This optional template is provided to assist small introducing firms in fulfilling their need to create and maintain business continuity plans (BC s! and emergency contact person lists under "#$%& %ule '()0 (Business Continuity lans and *mergency Contact #nformation!+ The template recogni,es that many small introducing firms rely on parts of a clearing firm-s or other entity-s BC for many of the mission.critical functions of the introducing firm+ $othing in this template creates any ne/ re0uirements on clearing firms or other entities, or ne/ re0uirements for BC s+ Note: "ollo/ing this template does not guarantee compliance /ith or create any safe harbor /ith respect to "#$%& rules, the federal securities la/s or state la/s+ The obligation to develop a BC is not a 1one.si,e.fits.all2 re0uirement, and you must tailor your plan to fit your particular firm-s situation+ "#$%& %ule '()0(c! re0uires that firms relying on another entity for elements of their BC or mission.critical systems must address that relationship in their plan+ This template is /ritten for small introducing firms that use a clearing firm, and includes sample language regarding the nature of that particular relationship only+ #f your firm conducts a different type of business (e.g+, sells only mutual funds!, you must modify the template to describe the entities you rely on and the nature of those relationships+ The language contained in this template is provided as a starting point for developing your firm-s plan+ #t is highly unli3ely that the language of this template standing alone /ill fully fit your firm-s business situation+ #n this regard, you must customi,e the language of this template to reflect your firm4s activities and issues+ #f you have prepared a plan in a different format, you may /ish to attach the appropriate sections of that plan to this template to confirm that you have addressed all of the individual elements+ Critical *lements There are 10 critical elements of a BC specified in "#$%& %ule '()0+ *ach firm need only address the elements applicable to its business, but if you do not include a specified element in your firm-s plan, your plan must document /hy it is not included5

(1! 6ata bac3.up and recovery (hard copy and electronic!7 (2! &ll mission critical systems7 ((! "inancial and operational assessments7 ('! &lternate communications bet/een customers and the member7 (8! &lternate communications bet/een the member and its employees7 (9! &lternate physical location of employees7 ()! Critical business constituent, ban3, and counter.party impact7 (:! %egulatory reporting7 (;! Communications /ith regulators7 and (10! <o/ the firm /ill assure customers- prompt access to their funds and securities in the event that the member determines that it is unable to continue its business+ =eep in mind that the above.listed elements are not e>haustive7 you should address other 3ey areas for your plan to be complete and thorough, based on your firm-s business and operations+ TEXT EXAMPLE? are provided to give you sample language that you can modify to create your firm-s plan+ Material in italics provides instructions, citations to relevant rules and other resources that you can use to develop your firm-s plan+ The "#$%& BC @eb page includes important information and lin3s to other /ebsites /ith useful information+ Aou may also consider consulting the Beneral &ccounting Cffice-s reports on 1 otential Terrorist &ttac3s5 &dditional &ctions $eeded to Better repare Critical "inancial Mar3et articipants,2 %eport $os+ B&C.0(.281("eb+ 200(! and B&C.0(.'1' ("eb+ 200(!7 the 6raft #nteragency @hite aper on ?ound ractices to ?trengthen the %esilience of the U+ ?+ "inancial ?ystem by the ?ecurities and *>change Commission (?*C! and other federal financial institution regulators7 and the business continuity information on the /ebsites of the ?ecurities #ndustry and "inancial Mar3ets &ssociation (?#"M&!, the Business Continuity #nstitute (BC#! and the "inancial ?ervices ?ector Coordinating Council for Critical #nfrastructure rotection and <omeland ?ecurity ("??CC!+ "irms relying on third.party providers to provide services in connection /ith their BC s should revie/ Notice to Members (NTM) 05-48, (Duly 2008!+ "or historical guidance and bac3ground, see NTM 04-37 and eg!lator" Notices 07-4# and 0$-%0+

Emergency Contact Persons

&'e(ti)" "o!r )irm*s t+o emerge(c" co(tact ,erso(s. -o!r )irm m!st i'e(ti)" its emerge(c" co(tact ,erso(s t.ro!g. t.e /&N A 0o(tact 1"stem (/01). &( a''itio(2 "o!r )irm m!st !se /01 to !,'ate t.e co(tact i()ormatio( ,rom,tl" (b!t (o later t.a( 30 'a"s )ollo+i(g a(" c.a(ge i( t.e i()ormatio() a(' a((!all" re3ie+ a(' !,'ate2 i) (ecessar"2 t.e i()ormatio( +it.i( 47 b!si(ess 'a"s a)ter t.e e(' o) eac. cale('ar "ear. Eac.

emerge(c" co(tact ,erso( m!st be a( associate' ,erso( o) t.e )irm2 a(' at least o(e emerge(c" co(tact ,erso( m!st be a member o) se(ior ma(ageme(t a(' a registere' ,ri(ci,al o) t.e )irm. &) "o!r )irm 'esig(ates a seco(' emerge(c" co(tact ,erso( +.o is (ot a registere' ,ri(ci,al o) "o!r )irm2 t.e( t.at co(tact ,erso( m!st be a member o) se(ior ma(ageme(t +.o .as 5(o+le'ge o) t.e )irm*s b!si(ess o,eratio(s. &) "o!r )irm .as o(l" o(e associate' ,erso(2 t.e seco(' emerge(c" co(tact m!st be a( i('i3i'!al2 eit.er registere' +it. a(ot.er )irm or (o(-registere'2 +.o .as 5(o+le'ge o) "o!r )irm*s b!si(ess o,eratio(s (e.g.2 "o!r )irm*s attor(e"2 acco!(ta(t or cleari(g )irm co(tact ,erso(). TEXT EXAMPLE6 Cur firm-s t/o emergency contact persons are5 E(ame2 ,.o(e (!mber2 emailF and E(ame2 ,.o(e (!mber2 email - i'e(ti)" seco(' ,erso(7s relatio(s.i, to t.e )irm i) (ot a registere' ,ri(ci,al o) t.e )irmF+ The firm /ill provide "#$%& /ith the contact information for the t/o emergency contact persons5 (1! name7 (2! title7 ((! mailing address7 ('! email address7 (8! telephone number7 and (9! facsimile number through the "#$%& Contact ?ystem ("C?!+ ENameF /ill promptly notify "#$%& of any change in this information through "C? (but no later than (0 days follo/ing the change! and /ill revie/, and if necessary update, this information /ithin 1) business days after the end of each calendar year+ !le6 /&N A !le 4370())8 NA19 !le 44%0.

Firm Policy
1tate "o!r )irm*s ob:ecti3es )or b!si(ess co(ti(!it" i( t.e )ace o) bot. i(ter(al a(' e;ter(al sig(i)ica(t b!si(ess 'isr!,tio(s (1<9s)2 i(cl!'i(g "o!r )irm*s obligatio( to gra(t c!stomers access to t.eir )!('s a(' sec!rities i( t.e e3e(t o) a sig(i)ica(t b!si(ess 'isr!,tio(. T.is ,olic" s.o!l' be gi3e( to all em,lo"ees. 1tate +.o .as t.e a!t.orit" to e;ec!te t.e ,la(2 +.ere t.e ,la( is store'2 a(' .o+ to access t.e ,la(. TEXT EXAMPLE5 Cur firm-s policy is to respond to a ?ignificant Business 6isruption (?B6! by safeguarding employees- lives and firm property, ma3ing a financial and operational assessment, 0uic3ly recovering and resuming operations, protecting all of the firm-s boo3s and records, and allo/ing our customers to transact business+ #n the event that /e determine /e are unable to continue our business, /e /ill assure customers prompt access to their funds and securities+

&+ ?ignificant Business 6isruptions (?B6s!

Cur plan anticipates t/o 3inds of ?B6s, internal and e>ternal+ #nternal ?B6s affect only our firm-s ability to communicate and do business, such as a fire in our building+ *>ternal ?B6s prevent the operation of the securities mar3ets or a number of firms, such as a terrorist attac3, a city flood, or a /ide.scale, regional disruption+ Cur response to an e>ternal ?B6 relies more heavily on other organi,ations and systems, especially on the capabilities of our clearing firm+

B+ &pproval and *>ecution &uthority

EName2 titleF, a registered principal, is responsible for approving the plan and for conducting the re0uired annual revie/+ EName2 titleF has the authority to e>ecute this BC +

C+ lan Gocation and &ccess

Cur firm /ill maintain copies of its BC plan and the annual revie/s, and the changes that have been made to it for inspection+ &n electronic copy of our plan is located on Eser3er (ameF in the E)ile=)ol'er (ameF+ !le6 /&N A !le 4370(b)2 (') a(' (e).

Business Description
1tate t.e t",es o) b!si(ess t.at "o!r )irm co('!cts. TEXT EXAMPLE6 Cur firm conducts business in e0uity, fi>ed income, and derivative securities+ Cur firm is an introducing firm and does not perform any type of clearing function for itself or others+ "urthermore, /e do not hold customer funds or securities+ @e accept and enter orders+ &ll transactions are sent to our clearing firm, /hich Ee>ecutes our orders,F compares them, allocates them, clears and settles them+ Cur clearing firm also maintains our customers- accounts, can grant customers access to them, and delivers funds and securities+ Cur firm services only retail customers E> retail and institutional customersF+ @e do not engage in any private placements+ Cur clearing firm is E(ame2 a''ress2 ,.o(e (!mber2 email a''ress2 +ebsiteF and our contact person at that clearing firm is E(ame2 ,.o(e (!mber2 emailF+ Cur clearing firm has also given us the follo/ing alternative contact in the event it cannot be reached5 E(ame2 a''ress2 ,.o(e (!mber2 email a''ress2 +ebsiteF

Office Locations
List t.e locatio(s o) all o) "o!r o))ices2 registere' a(' !(registere'2 a(' state t.e mea(s o) tra(s,ortatio( t.at em,lo"ees ma" !se to reac. t.at )acilit". 1tate also +.ic. missio( critical s"stems2 as 'e)i(e' belo+2 ta5e ,lace at eac. locatio(. T*HT *H&M G*5 >!r )irm .as o))ices locate' i( Locatio( ?4 a(' Locatio( ?#.

6+ Cffice Gocation I1
Cur Gocation I1 Cffice is located at Ea''ressF+ #ts main telephone number is Ei(sertF+ Cur employees may travel to that office by means of Ei(sert all t.at a,,l" (e.g.2 )oot2 car2 s!b+a"2 trai(2 b!s2 boat2 ,la(e2 etc.)F+ @e engage in order ta3ing and entry at this location+

*+ Cffice Gocation I2
'

Cur Gocation I2 Cffice is located at Ea''ressF+ #ts main telephone number is Ei(sertF+ Cur employees may travel to that office by means of Ei(sert all t.at a,,l" e.g.2 )oot2 car2 s!b+a"2 trai(2 b!s2 boat2 ,la(e2 etc.)F+ @e engage in order ta3ing and entry at this location+

Alternative Physical Location(s of Employees

List t.e alter(ate ,."sical locatio((s) "o!r )irm +ill !se i( t.e e3e(t a( 1<9 a))ects t.e o,eratio( o) "o!r o))ice locatio(s. T*HT *H&M G*5 #n the event of an ?B6, /e /ill move our staff from affected office(s! to the closest of our unaffected office location(s!+ #f none of our other office locations is available to receive those staff, /e /ill move them to E(ame o) )irm2 (i) 'i))ere(t)2 a''ressF+ #ts main telephone number is E,.o(e (!mberF+ !le6 /&N A !le 4370(c)(%).

Customers! Access to Fun"s an" #ecurities

1tate t.at "o!r )irm 'oes (ot mai(tai( c!sto'" o) c!stomers* )!('s or sec!rities a(' .o+ "o!r )irm +ill ma5e t.em a3ailable to c!stomers i( t.e e3e(t o) a( 1<9. 1tate t.e e(tit" at +.ic. s!c. )!('s a(' sec!rities are .el' a(' .o+ "o!r )irm +ill )acilitate access to t.em. 9escribe a(" relatio(s.i, bet+ee( "o!r )irm*s abilit" to gra(t c!stomer access to )!('s a(' sec!rities a(' 1ec!rities &(3estor Protectio( 0or,oratio( (1&P0) reg!latio(s o( t.e 'isb!rseme(t o) )!('s a(' sec!rities. TEXT EXAMPLE6 Cur firm does not maintain custody of customers- funds or securities, /hich are maintained at our clearing firm, Ei(sert (ameF+ #n the event of an internal or e>ternal ?B6, if telephone service is available, our registered persons /ill ta3e customer orders or instructions and contact our clearing firm on their behalf, and if our @eb access is available, our firm /ill post on our /ebsite that customers may access their funds and securities by contacting Ei(sert co(tact i()ormatio(F+ The firm /ill ma3e this information available to customers through its disclosure policy+ #f ?# C determines that /e are unable to meet our obligations to our customers or if our liabilities e>ceed our assets in violation of ?ecurities *>change &ct %ule 18c(.1, ?# C may see3 to appoint a trustee to disburse our assets to customers+ @e /ill assist ?# C and the trustee by providing our boo3s and records identifying customer accounts subJect to ?# C regulation Eand i(sert a(" a''itio(al ,roce'!resF+ !les6 /&N A !le 4370(a)8 ?ecurities *>change &ct %ule 18c(.17 see also 18 U+?+C+ K ):eee+

Data Bac$%&p an" 'ecovery ((ar" Copy an" Electronic

&'e(ti)" t.e locatio( o) "o!r )irm*s ,rimar" boo5s a(' recor's (.ar' co," a(' electro(ic) a(' t.e locatio( o) "o!r )irm*s bac5-!, boo5s a(' recor's (.ar' co," a(' electro(ic). 9escribe .o+ "o!r )irm bac5s !, its 'ata. &( a''itio(2 'escribe .o+ "o!r )irm +ill reco3er 'ata i( t.e e3e(t o) a( 1<9. TEXT EXAMPLE5 Cur firm maintains its primary hard copy boo3s and records and its electronic records at Ea''ressF+ EName2 title2 ,.o(e (!mberF is responsible for the maintenance of these boo3s and records+ Cur firm maintains the follo/ing document types and forms that are not transmitted to our clearing firm5 EList 'oc!me(t t",es a(' )orms2 s!c. as (e+ acco!(t )orms2 etc+F+ Cur firm maintains its bac3.up hard copy boo3s and records at Eot.er a''ressF+ These records are E,a,er co,ies2 micro)ilm2 etc.F+ EName2 title2 ,.o(e (!mberF is responsible for the maintenance of these bac3.up boo3s and records+ Cur firm bac3s up its paper records by copying and ta3ing them to our bac3.up site+ @e bac3 up our records every Etime ,erio'F+ The firm bac3s up its electronic records daily Eor ot.er time ,erio'F by E'escribe ,rocessF, and 3eeps a copy at Eot.er a''ress8 ma" be t.e same as .ar' co," bac5-!, siteF+ #n the event of an internal or e>ternal ?B6 that causes the loss of our paper records, /e /ill physically recover them from our bac3.up site+ #f our primary site is inoperable, /e /ill continue operations from our bac3.up site or an alternate location+ "or the loss of electronic records, /e /ill either physically recover the storage media or electronically recover data from our bac3.up site, or, if our primary site is inoperable, continue operations from our bac3.up site or an alternate location+ !le6 /&N A !le 4370(c)(4).

Financial an" Operational Assessments

9escribe "o!r )irm*s ,roce'!res to i'e(ti)" c.a(ges i( its o,eratio(al2 )i(a(cial a(' cre'it ris5 e;,os!res i( t.e e3e(t o) a( 1<9. -o!r )irm s.o!l' ,erio'icall" assess t.e c.a(ges i( t.ese e;,os!res a(' @!ic5l" ma5e s!c. a( assessme(t i( co((ectio( +it. a( 1<9.

"+ Cperational %is3

>,eratio(al ris5 i(cl!'es t.e )irm*s abilit" to mai(tai( comm!(icatio(s +it. c!stomers a(' to retrie3e 5e" acti3it" recor's t.ro!g. its missio( critical s"stems. TEXT EXAMPLE6 #n the event of an ?B6, /e /ill immediately identify /hat means /ill permit us to communicate /ith our customers, employees, critical business constituents, critical ban3s, critical counter.parties and regulators+ &lthough the effects of an ?B6 /ill

determine the means of alternative communication, the communications options /e /ill employ /ill include Eo!r +ebsite2 tele,.o(e 3oice mail2 sec!re email2 etc.F+ #n addition, /e /ill retrieve our 3ey activity records as described in the section above, 6ata Bac3.Up and %ecovery (<ard Copy and *lectronic!+ !les6 /&N A !les 4370(c)(3)2(c)(4)2 (c)(5)2 (c)(7)2 (c)($ A (g)(#)).

B+ "inancial and Credit %is3

/i(a(cial ris5 i(3ol3es t.e )irm*s abilit" to )!(' o,eratio(s a(' mai(tai( a'e@!ate )i(a(ci(g a(' s!))icie(t ca,ital. T.e )irm also ma" )ace cre'it ris5 (+.ere its i(3estme(ts ma" ero'e )rom t.e lac5 o) li@!i'it" i( t.e broa'er mar5et)2 +.ic. +o!l' also .i('er t.e abilit" o) t.e )irm*s co!(ter,arties to )!l)ill t.eir obligatio(s. TEXT EXAMPLE6 #n the event of an ?B6, /e /ill determine the value and li0uidity of our investments and other assets to evaluate our ability to continue to fund our operations and remain in capital compliance+ @e /ill contact our clearing firm, critical ban3s and investors to apprise them of our financial status+ #f /e determine that /e may be unable to meet our obligations to those counter.parties or other/ise continue to fund our operations, /e /ill re0uest additional financing from our ban3 or other credit sources to fulfill our obligations to our customers and clients+ #f /e cannot remedy a capital deficiency, /e /ill file appropriate notices /ith our regulators and immediately ta3e appropriate steps, including Ei(sert ,roce'!resF+ !les6 /&N A !les 4370(c)(3)2 (c)(8) A (g)(#).

)ission Critical #ystems

9escribe "o!r )irm*s missio( critical s"stems a(' +.et.er "o!r )irm or "o!r cleari(g )irm .as res,o(sibilit" )or t.em2 a(' "o!r )irm*s re3ie+ o) its cleari(g )irm*s ca,abilities to ,er)orm missio( critical )!(ctio(s )or "o!r )irm. TEXT EXAMPLE6 Cur firm-s 1mission critical systems2 are those that ensure prompt and accurate processing of securities transactions, including order ta3ing, entry, e>ecution, comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts and the delivery of funds and securities+ More specifically, these systems include5 Elist s"stems (ames a(' t.eir )!(ctio(sF+ @e have primary responsibility for establishing and maintaining our business relationships /ith our customers and have sole responsibility for our mission critical functions of order ta3ing EandF entry Eand e>ecutionF+ Cur clearing firm provides, through contract, the Ee>ecution,F comparison, allocation, clearance and settlement of securities transactions, maintenance of customer accounts, access to customer accounts and the delivery of funds and securities+

Cur clearing firm contract provides that our clearing firm /ill maintain a business continuity plan and the capacity to e>ecute that plan+ Cur clearing firm represents that it /ill advise us of any material changes to its plan that might affect our ability to maintain our business Eand has presented us /ith an e>ecutive summary of its plan, /hich is attachedF+ #n the event our clearing firm e>ecutes its plan, it represents that it /ill notify us of such e>ecution and provide us e0ual access to services as its other customers+ #f /e reasonably determine that our clearing firm has not or cannot put its plan in place 0uic3ly enough to meet our needs, or is other/ise unable to provide access to such services, our clearing firm represents that it /ill assist us in see3ing services from an alternative source+ Cur clearing firm represents that it bac3s up our records at a remote Eor, ,re)erabl"2 out of regionF site+ Cur clearing firm represents that it operates a bac3.up operating facility in a geographically separate area /ith the capability to conduct the same volume of business as its primary site+ Cur clearing firm has also confirmed the effectiveness of its bac3.up arrangements to recover from a /ide scale disruption by testingE, and it has confirmed that it tests its bac3.up arrangements every time ,erio'F. %ecovery.time obJectives provide concrete goals to plan for and test against+ They are not, ho/ever, hard and fast deadlines that must be met in every emergency situation, and various e>ternal factors surrounding a disruption, such as time of day, scope of disruption and status of critical infrastructureLparticularly telecommunicationsLcan affect actual recovery times+ %ecovery refers to the restoration of clearing and settlement activities after a /ide.scale disruption7 resumption refers to the capacity to accept and process ne/ transactions and payments after a /ide.scale disruption+ Cur clearing firm has the follo/ing ?B6 recovery time and resumption obJectives5 recovery time period of Ee.g.2 +it.i( 4 .o!rsF8 and resumption time of Ee.g.2 +it.i( t.e same b!si(ess 'a"F+ ENameF /ill periodically revie/ our clearing firm-s capabilities to perform the mission critical functions the clearing firm has contracted to perform for our firm+

&+ Cur "irm-s Mission Critical ?ystems

*+ Or"er ,a$ing 9escribe .o+ "o!r )irm +ill .a('le or'er ta5i(g i( t.e e3e(t o) a( 1<9. TEXT EXAMPLE5 Currently, our firm receives orders from customers via Ei(sert all t.at a,,l" (e.g.2 tele,.o(e2 )a;2 email2 +ebsite at Bi(sert C LD2 i(-,erso( 3isits b" t.e c!stomer2 etc.)F+ 6uring an ?B6, either internal or e>ternal, /e /ill continue to ta3e orders through any of these methods that are available and reliable, and in addition, as communications permit, /e /ill inform our customers /hen communications become available to tell them /hat alternatives they have to send their orders to us+ Customers /ill be informed of alternatives by Ei(sert met.o'F+ #f necessary, /e /ill advise our

customers to place orders directly /ith our clearing firm at Ei(sert cleari(g )irm co(tact i()ormatio(F+ -+ Or"er Entry 9escribe "o!r )irm*s ,roce'!res i) a( 1<9 ,re3e(ts it )rom e(teri(g or'ers recei3e' )rom c!stomers. TEXT EXAMPLE5 Currently, our firm enters orders by recording them on paper and electronically and sending them to our clearing firm electronically or telephonically+ Alter(ati3el"2 /e place customer orders through Ei(sert (ame o) s"stemF. @e have contacted E(ame o) s"stem(s)F and /ere told that, under its BC , /e can e>pect Eser3icesF /ithin EtimeF. #n the event of an internal ?B6, /e /ill enter and send records to our clearing firm by the fastest alternative means available, /hich include Ei(sert mea(s "o!r )irm +ill !seF+ #n the event of an e>ternal ?B6, /e /ill maintain the order in electronic or paper format, and deliver the order to the clearing firm by the fastest means available /hen it resumes operations+ #n addition, during an internal ?B6, /e may need to refer our customers to deal directly /ith our clearing firm for order entry+ .+ Or"er E/ecution &) "o!r )irm e;ec!tes or'ers2 'escribe "o!r ,roce'!res i) a( 1<9 ,re3e(ts "o!r )irm )rom e;ec!ti(g or'ers recei3e' )rom c!stomers. &) "o!r )irm 'oes (ot e;ec!te or'ers2 i(cl!'e or'er e;ec!tio( i( t.e list o) missio( critical s"stems t.at "o!r cleari(g )irm ,ro3i'es to "o!r )irm i( t.e (e;t sectio(2 Missio( 0ritical 1"stems Pro3i'e' b" >!r 0leari(g /irm. TEXT EXAMPLE5 @e currently e>ecute orders by E'escribe c!rre(t e;ec!tio( ,roce'!resF+ #n the event of an internal ?B6, /e /ould E'escribe "o!r e;ec!tio( ,roce'!res i( t.e e3e(t o) a( i(ter(al 1<9F+ #n the event of an e>ternal ?B6, /e /ould E'escribe "o!r e;ec!tio( ,roce'!res i( t.e e3e(t o) a( e;ter(al 1<9F+ 0+ Other #ervices Currently Provi"e" to Customers TEXT EXAMPLE5 #n addition to those services listed above in this section, /e also E'escribe a(" ot.er ser3ices "o! ,ro3i'e c!stomersF+ #n the event of an internal ?B6, /e /ould E'escribe .o+ "o! +o!l' ,ro3i'e t.ose ser3ices i( t.e e3e(t o) a( i(ter(al 1<9F+ #n the event of an e>ternal ?B6, /e /ould E'escribe .o+ "o! +o!l' ,ro3i'e t.ose ser3ices i( t.e e3e(t o) a( e;ter(al 1<9F+

B+ Mission Critical ?ystems rovided by Cur Clearing "irm

9escribe t.e arra(geme(ts "o! .a3e +it. "o!r cleari(g )irm to ,ro3i'e ot.er missio( critical s"stems.

TEXT EXAMPLE5 Cur firm relies, by contract, on our clearing firm to provide Eorder e>ecutionF, order comparison, order allocation, customer account maintenance andMor access and delivery of funds and securities+ !les6 /&N A !les 3540(c)(#) A (g)(4).

Alternate Communications Bet1een the Firm an" Customers2 Employees2 an" 'egulators &+ Customers
9escribe t.e alter(ate mea(s o) comm!(icatio(s t.at "o!r )irm +ill !se to comm!(icate +it. its c!stomers i( t.e e3e(t o) a( 1<9. TEXT EXAMPLE6 @e no/ communicate /ith our customers using Ei(sert all t.at a,,l" (e.g.2 t.e tele,.o(e2 email2 o!r +ebsite2 )a;2 C.1. mail a(' i(-,erso( 3isits at o!r )irm or a(ot.er locatio()F+ #n the event of an ?B6, /e /ill assess /hich means of communication are still available to us, and use the means closest in speed and form (/ritten or oral! to the means that /e have used in the past to communicate /ith the other party+ "or e>ample, if /e have communicated /ith a party by email but the #nternet is unavailable, /e /ill call them on the telephone and follo/ up /here a record is needed /ith paper copy in the U+?+ mail+ !le6 /&N A !le 4370(c)(4).

B+ *mployees
9escribe t.e alter(ate mea(s o) comm!(icatio(s t.at "o!r )irm +ill !se to comm!(icate +it. its em,lo"ees i( t.e e3e(t o) a( 1<9. TEXT EXAMPLE6 @e no/ communicate /ith our employees using Ei(sert all t.at a,,l" (e.g.2 tele,.o(e2 email2 a(' i( ,erso(2 etc.)F+ #n the event of an ?B6, /e /ill assess /hich means of communication are still available to us, and use the means closest in speed and form (/ritten or oral! to the means that /e have used in the past to communicate /ith the other party+ @e /ill also employ a call tree so that senior management can reach all employees 0uic3ly during an ?B6+ The call tree includes all staff home and office phone numbers+ @e have identified persons, noted belo/, /ho live near each other and may reach each other in person5 The person to invo3e use of the call tree is5 Ei(sert (ameF Caller Be.g.2 Perso( A Perso( 0 Call Recipients Perso( <2 Perso( 02 Perso( 9 Perso( E2 Perso( /2 Perso( E.D

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!le6 /&N A !le 4370(c)(5).

C+ %egulators
9escribe t.e alter(ate mea(s o) comm!(icatio(s t.at "o!r )irm +ill !se to comm!(icate +it. its reg!lators i( t.e e3e(t o) a( 1<9. TEXT EXAMPLE6 @e are currently members of the follo/ing self.regulatory organi,ations (?%Cs!, and are also regulated by5 Ei(sert list o) a,,licable 1 >2 )e'eral a(' state sec!rities reg!latorsF. @e communicate /ith our regulators using Ei(sert all t.at a,,l" e.g.2 tele,.o(e2 email2 )a;2 C.1. mail2 i( ,erso(2 etc.)F+ #n the event of an ?B6, /e /ill assess /hich means of communication are still available to us, and use the means closest in speed and form (/ritten or oral! to the means that /e have used in the past to communicate /ith the other party+ !le6 /&N A !le 4370(c)($).

Critical Business Constituents2 Ban$s2 an" Counter%Parties

9escribe "o!r )irm*s ,roce'!res to i'e(ti)" c.a(ges i( t.e im,act a( 1<9 +ill .a3e o( its relatio(s.i, +it. its critical b!si(ess co(stit!e(ts2 ba(5s2 a(' co!(ter-,arties2 a(' .o+ it +ill 'eal +it. t.ose im,acts.

C+ Business constituents
T*HT *H&M G*5 @e have contacted our critical business constituents (businesses /ith /hich /e have an ongoing commercial relationship in support of our operating activities, such as vendors providing us critical services!, and determined the e>tent to /hich /e can continue our business relationship /ith them in light of the internal or e>ternal ?B6+ @e /ill 0uic3ly establish alternative arrangements if a business constituent can no longer provide the needed goods or services /hen /e need them because of a ?B6 to them or our firm+ Eor /e have entered into a supplemental contract /ith certain critical business constituents to provide such services+ The alternative suppliers are disclosed belo/+F Cur maJor suppliers are5 Elist ser3ice=,ro'!ct2 s!,,lier*s (ame2 a''ress a(' ,.o(e (!mber a(' a(" alter(ati3e s!,,lier*s (ame2 a''ress2 a(' ,.o(e (!mber+F !les6 /&N A !le 4370(c)(7).

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6+ Ban3s
TEXT EXAMPLE6 @e have contacted our ban3s and lenders to determine if they can continue to provide the financing that /e /ill need in light of the internal or e>ternal ?B6+ The ban3 maintaining our operating account is5 Elist ba(5 (ame2 a''ress2 ,.o(e (!mber2 a(' co(tactF+ The ban3 maintaining our roprietary &ccount of #ntroducing Bro3ersM6ealers ( &#B account! is Elist ba(5 (ame2 a''ress2 ,.o(e (!mber2 a(' co(tactF+ #f our ban3s and other lenders are unable to provide the financing, /e /ill see3 alternative financing immediately from Eba(5=le('er (ame2 a''ress2 a(' ,.o(e (!mbersF+ !les6 /&N A !le 4370(c)(7).

*+ Counter. arties
TEXT EXAMPLE6 @e have contacted our critical counterparties, such as other bro3er. dealers or institutional customers, to determine if /e /ill be able to carry out our transactions /ith them in light of the internal or e>ternal ?B6+ @here the transactions cannot be completed, /e /ill /or3 /ith our clearing firm or contact those counterparties directly to ma3e alternative arrangements to complete those transactions as soon as possible+ !les6 /&N A !le 4370(c)(7).

'egulatory 'eporting
9escribe .o+ "o!r )irm +ill )ile its reg!lator" re,orts i( t.e e3e(t o) a( 1<9. TEXT EXAMPLE6 Cur firm is subJect to regulation by5 Ei(sert list o) a,,licable )e'eral2 sel)-reg!lator" orga(iFatio( a(' state sec!rities reg!lators.F @e no/ file reports /ith our regulators using paper copies in the U+?+ mail, and electronically using fa>, email and the #nternet+ #n the event of an ?B6, /e /ill chec3 /ith the ?*C, "#$%& and other regulators to determine /hich means of filing are still available to us, and use the means closest in speed and form (/ritten or oral! to our previous filing method+ #n the event that /e cannot contact our regulators, /e /ill continue to file re0uired reports using the communication means available to us+ E&(sert reg!lator co(tact i()ormatio(F+ !le6 /&N A !le 4370(c)(8).

Disclosure of Business Continuity Plan

Csi(g t.e <0P stateme(t TEXT EXAMPLE attac.e' to t.is tem,late2 'escribe .o+ "o!r )irm 'iscloses its b!si(ess co(ti(!it" ,la((i(g to c!stomers. Attac. t.e c!rre(t 3ersio( o) "o!r 'isclos!re stateme(t.-o!r )irm ma" !se t.e 'isclos!re stateme(t e;am,le attac.e'

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to t.is tem,late. 1ee Attac.me(t A. &) t.e 'isclos!re stateme(t e;am,le is (ot !se'2 "o!r )irm*s 'isclos!re stateme(t m!st ,ro3i'e t.e same i()ormatio( as 'isc!sse' i( t.e e;am,le. -o!r )irm*s 'isclos!re stateme(t (ee' (ot 'isclose t.e s,eci)ic locatio( o) a(" bac5-!, )acilities2 a(" ,ro,rietar" i()ormatio( co(tai(e' i( t.e <0P or t.e ,arties +it. +.om t.e )irm .as bac5-!, arra(geme(ts. . TEXT EXAMPLE6 &ttached is our /ritten BC disclosure statement /e provide customers at account opening Elist ot.er times o) 'isclos!re i) a,,licable2 s!c. as a((!all"D + @e also Epost the disclosure statement on our /ebsite andF mail it to customers upon re0uest+ !le6 /&N A !le 4370(e).

&p"ates an" Annual 'evie1

9escribe "o!r )irm*s ,la( !,'ate ,olic" a(' a((!al re3ie+ o) "o!r <0P. TEXT EXAMPLE6 Cur firm /ill update this plan /henever /e have a material change to our operations, structure, business or location or to those of our clearing firm+ #n addition, our firm /ill revie/ this BC annually, on E'ateF, to modify it for any changes in our operations, structure, business or location or those of our clearing firm+ !le6 /&N A !le 4370(b).

#enior )anager Approval

A,,ro3e t.e )irm*s <0P b" sig(i(g belo+. TEXT EXAMPLE5 # have approved this Business Continuity lan as reasonably designed to enable our firm to meet its obligations to customers in the event of an ?B6+ !le6 /&N A !le 4370('). ?igned5 Title5 6ate5 NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN

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&ttachment & to E/irm NameF Business Continuity lan

TEXT EXAMPLE o) <0P 9isclos!re 1tateme(t )or &(tro'!ci(g /irms +it. a 0leari(g Arra(geme(t 3Firm Name4!s Business Continuity Planning
E/irm NameF has developed a Business Continuity lan on ho/ /e /ill respond to events that significantly disrupt our business+ ?ince the timing and impact of disasters and disruptions is unpredictable, /e /ill have to be fle>ible in responding to actual events as they occur+ @ith that in mind, /e are providing you /ith this information on our business continuity plan+ Contacting &s O #f after a significant business disruption you cannot contact us as you usually do at E)irm ,.o(e (!mber=emailF, you should call our alternative number E)irm emerge(c" (!mberF Eor go to our /ebsite at PC LQF+ #f you cannot access us through either of those means, you should contact our clearing firm, E(ameF at Ecleari(g )irm (!mber a(' C LF for instructions on ho/ it may Elist t.e ser3ices "o!r cleari(g )irm ma" ,ro3i'e to "o!r c!stomers i( t.e e3e(t o) a sig(i)ica(t b!si(ess 'isr!,tio(8 )or e;am,le2 ,ro3i'e ,rom,t access to )!('s a(' sec!rities2 e(ter or'ers a(' ,rocess ot.er tra'e-relate'2 cas. a(' sec!rit" tra(s)er tra(sactio(s )or "o!r c!stomersF. Our Business Continuity Plan O @e plan to 0uic3ly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, ma3ing a financial and operational assessment, protecting the firm-s boo3s and records, and allo/ing our customers to transact business+ #n short, our business continuity plan is designed to permit our firm to resume operations as 0uic3ly as possible, given the scope and severity of the significant business disruption+ Cur business continuity plan addresses5 data bac3up and recovery7 all mission critical systems7 financial and operational assessments7 alternative communications /ith customers, employees, and regulators7 alternate physical location of employees7 critical supplier, contractor, ban3 and counter.party impact7 regulatory reporting7 and assuring our customers prompt access to their funds and securities if /e are unable to continue our business+ Cur clearing firm, E(ameF, bac3s up our important records in a geographically separate area+ @hile every emergency situation poses uni0ue problems based on e>ternal factors, such as time of day and the severity of the disruption, /e have been advised by our clearing firm that its obJective is to restore its o/n operations and be able to complete e>isting transactions and accept ne/ transactions and payments /ithin Eres!m,tio( time ,erio'F+ Aour orders and re0uests for funds and securities could be delayed during this period+ 5arying Disruptions O ?ignificant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district /here our firm is located, the city /here /e are located, or the /hole region+ @ithin each of these areas, the severity of the disruption can also vary from minimal to severe+ #n a disruption to only our firm or a building housing our firm, /e /ill transfer our operations to a local site /hen needed and e>pect to recover and resume business /ithin E; time ,erio'F+ #n a disruption affecting our business district, city, or region, /e /ill transfer our operations to a site outside of the affected area, and recover and resume business /ithin E" time ,erio'F+ #n either situation, /e plan to continue in business, transfer operations to our clearing firm if necessary, and notify you through our /ebsite E C LF or

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our customer emergency number, E)irm emerge(c" (!mberF ho/ to contact us+ #f the significant business disruption is so severe that it prevents us from remaining in business, /e /ill assure our customer-s prompt access to their funds and securities+ For more information O #f you have 0uestions about our business continuity planning, you can contact us at E)irm b!si(ess (!mber or email a''ressF+

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