Federal Interagency Paper Guidelines

The Sept. 11th attack on New York exposed certain vulnerabilities within the U.S. financial markets. In response to this unprecedented assault upon the financial system, in April 2003, the SEC, Federal Reserve and Office of the Comptroller issued an interagency Paper on "Sound Practices to Strengthen the Resilience of the U.S. Financial System." The paper outlines recommendations to ensure that "key organizations in critical financial markets are able to recover clearing and settlement activities in the event of a wide-scale disruption as rapidly as possible."

The paper notes that firms need to have "an appropriate level of geographic diversity between primary and back-up sites" and warns that back-up sites should be established outside of the New York City "blast zone" and supported by a separate power operator and a separate watershed. While other states can meet most of these requirements, northeastern Pennsylvania is the only area that not only meets the requirements, but is also located within the 125 fiber miles necessary for the synchronous data transmission needed by many financial services firms.

A full copy of the report can be obtained at http://www.sec.gov/news/studies/34-47638.htm.

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