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February 16, 2007

Trading Spaces When the Lights Go Out

Power Outages and Disease Top Disaster Recovery Worries

By Melanie Wold

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Disaster recovery and business continuity planning are essential for financial services firms, partly because they don't want to see any interruptions in their business if the worst should happen, and partly because of demands from regulators. Business continuity plans have been through some stress-testing for terrorist attacks and hurricanes in the past few years; and most large equities firms are now better prepared to deal with similar issues should they happen again. But, as if brokerage firms didn't have enough to worry about, there are two new worries to add to the list of potential disasters-electrical power outages and pandemic-which they may not be ready for.

Trading and broking firms have long realized the importance of having backed-up data and remote sites for their traders and clearing and settlements staff, equipped with PCs, phones, a local area network and access to electronic systems. This is the classic version of business continuity-a dedicated or shared offsite location.

A lighter and less expensive version, which enables remote access to applications and desktop functions, has been made possible by newer technologies such as secure virtual private networks (VPNs). These allow critical staff to work from home or another site until the primary office is up and ready for business again.

Most trading houses would need both solutions-a dedicated or shared location for traders, back-office and some middle-office staff, as well as remote access for other back-office and administrative personnel. This means that disaster recovery plans have to span back-office settlement and clearing all the way up to the front line: the trading desk.

Flu Season

One of the most pressing concerns today is a possible pandemic; this has been predicted by scientists for a few years and an outbreak of avian flu ranks as the biggest concern. In the case of a pandemic, few staffers would want to go to a remote location and risk getting sick and possibly infecting their families.

"In this case you have to use remote technology," says Alexander Tabb, practice leader and managing director for consultants the TABB Group's crisis and continuity services practice.

Solutions such as Citrix Systems' offering, code-named Project Kent, provides dispersed workers with the ability to connect to applications, data and people if they're not at their workplace. It is offered as an integral part of IBM's Virtual Workplace Continuity service product and integrates emergency notifications and employee updates, as well as access to applications, communications and collaboration.

Philippe Jarre, vice president of business continuity and resilience at IBM, says this is mainly a back-office solution, and that he believes traders will continue to work in back-up locations as a team until technology better supports trading from home.

"We are going to work with financial services firms to see how far we can push the front office into home-based solutions," Jarre says. For traders to do their job more effectively from home, he notes, they will need new technology so that they can work as a group. That would mean installing real-time cameras, which is very expensive.