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Regulation Systems Compliance and Integrity

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Citation Edit

Securities and Exchange Commission, Regulation Systems Compliance and Integrity (Feb. 3, 2015) (full-text).

Overview Edit

The SEC has adopted a new Regulation Systems Compliance and Integrity (Regulation SCI) under the Securities Exchange Act of 1934 and conforming amendments to Regulation ATS under the Exchange Act. Regulation SCI will apply to certain self-regulatory organizations (including registered clearing agencies), alternative trading systems (“ATSs”), plan processors, and exempt clearing agencies (collectively, "SCI entities"), and will require these SCI entities to comply with requirements with respect to the automated systems central to the performance of their regulated activities.

Regulation SCI will require SCI entities to establish written policies and procedures reasonably designed to ensure that their systems have levels of capacity, integrity, resiliency, availability, and security adequate to maintain their operational capability and promote the maintenance of fair and orderly markets, and that they operate in a manner that complies with the Exchange Act.

It will also require SCI entities to mandate participation by designated members or participants in scheduled testing of the operation of their business continuity and disaster recovery plans, including backup systems, and to coordinate such testing on an industry- or sector-wide basis with other SCI entities.

In addition, Regulation SCI will require SCI entities to take corrective action with respect to SCI events (defined to include systems disruptions, systems compliance issues, and systems intrusions), and notify the Commission of such events.

Regulation SCI will further require SCI entities to disseminate information about certain SCI events to affected members or participants and, for certain major SCI events, to all members or participants of the SCI entity.

In addition, Regulation SCI will require SCI entities to conduct a review of their systems by objective, qualified personnel at least annually, submit quarterly reports regarding completed, ongoing, and planned material changes to their SCI systems to the Commission, and maintain certain books and records.

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