NexTrend Securities, Inc. Business Continuity Plan (BCP)

Transcription

1 NexTrend Securities, Inc. Business Continuity Plan (BCP) I. Emergency Contact NexTrend Securities, Inc. (the firm ) emergency contact person: Name: Mark Cherlin Position: Executive Representative and Registered Principal Phone Number: (972) Address: mcherlin@nextrend.com Emergency contact information will be updated in the event of a material change, and the Executive Representative will review them within 17 business days of the end of each quarter. II. Firm Policy The firm s policy is to respond to a Significant Business Disruption (SBD) by safeguarding employees and firm property, making an immediate financial and operational assessment, quickly recovering and resuming operations, protecting all of the firm s books and records, and allowing our customers to transact business. In the event that the firm determines it is unable to continue business, customers will be notified of the appropriate information to enable them prompt access to their funds and securities. A. Significant Business Disruptions (SBDs) The firm s plan anticipates two kinds of SBDs, internal and external. Internal SBDs affect only the firm s ability to communicate and do business, such as a fire in the building. External SBDs prevent the operation of the securities markets or a number of firms, such as a terrorist attack, flood, or a wide-scale, regional disruption. The firm s response to an external SBD relies more heavily on other organizations and systems, especially on the capabilities of the clearing firm, APEX Clearing. B. Approval and Execution Authority Mark Cherlin, President and CEO, a registered principal, is responsible for approving the plan and for conducting the required annual review. Mr. Cherlin has the authority to execute this BCP.

2 C. Plan Location and Access The firm will maintain copies of its BCP plan and the annual reviews, and the changes that have been made to it for inspection. The firm has given FINRA Regulation, Inc, located in Dallas, Texas, a copy of the firm s plan. III. Business Description The firm conducts business in equity, municipal, fixed income, options and private placements. The firm is an introducing firm and does not perform any type of clearing function for itself or others. The firm is only a broker-dealer of record for trades placed electronically directly by customers and any direct contact by firm personnel with customers is rare. Furthermore, the firm does not hold customer funds or securities. The firm accepts and enters orders. All transactions are sent to the firm s clearing firm which clears and settles them. The clearing firm also maintains the customers accounts, can grant customers access to them, and delivers funds and securities. The firm services retail and institutional customers. The firm s clearing firm is: Name: APEX Clearing Address: 1700 Pacific Avenue, Suite 1400, Dallas, Texas Phone number: (214) or (888) address: info@apexclearing.com Contact person: Andre Alexander IV. Office Locations The firm has offices located at 5200 Keller Springs, Suite 812 Dallas, Texas The main telephone number is (972) The firm s employees may travel to that office by individual preferred means of transportation car, bus or any other form of transportation. The firm engages in accepting new account paperwork at this location and forwarding the information to the clearing firm, to receive final account numbers. V. Alternative Physical Location(s) of Employees In the event of an SBD, the firm will move its staff from affected offices to SBC s Premier SERV Data Center, Dallas, Texas or another location the firm determines will satisfy its business needs. Once this site is established, however, the Firm can reasonably operate its business from any location with an Internet connection and telephone availability. In the event of an SBD, wherein all computers/software are destroyed, following assessment of the firm s continuation requirements, proper replacement will be made in the most efficient manner possible and to ensure the fastest return to normal business operation for all retail and institutional customers.

3 VI. Customers Access to Funds and Securities The firm does not maintain custody of customers funds or securities, which are maintained at the clearing firm, APEX Clearing. In the event of an internal or external SBD and trading is not available electronically then only in an emergency situation and, if telephone service is available, the firm s registered persons will take customer orders or instructions and contact the clearing firm on their behalf, and if messages are able to be sent via the NexTrend platform, or if the firm s Web access is available, the firm will post on its platform or its web site that customers may access their funds and securities by contacting a registered representative at the firm. The firm will make this information available to customers through its disclosure policy. If SIPC determines that the firm is unable to meet its obligations to our customers or if its liabilities exceed its assets in violation of Securities Exchange Act Rule 15c3-1, SIPC may seek to appoint a trustee to disburse its assets to customers. The firm will assist SIPC and the trustee by providing its books and records identifying customer accounts subject to SIPC regulation. VII. Data Back-Up and Recovery (Hard Copy and Electronic) The firm maintains its primary hard copy books and records and its electronic records at 5200 Keller Springs, Suite 812 Dallas, Texas Mark Cherlin the firms CEO, is responsible for the maintenance of these books and records. The firm maintains the individual files for each customer. A copy of the account request forms only are forwarded to the clearing firm. Copies of all correspondence regarding individual accounts are not transmitted to the clearing firm. The firm maintains a back-up hard copy of transaction books and records at an alternate location. The clearing firm furnishes various reports relative to the orders processed for each day of business. VIII. Financial and Operational Assessments A. Operational Risk In the event of an SBD, the firm will immediately identify what means will permit communication with its customers, employees, critical business constituents, critical banks, critical counter-parties, and regulators. Although the effects of an SBD will determine the means of alternative communication, the communications options the firm will employ will include the individual address for each customer and/or telephone contact number.

4 B. Financial and Credit Risk In the event of an SBD, the firm will determine the value and liquidity of its investments and other assets to evaluate its ability to continue to fund its operations and remain in capital compliance. The firm will contact its clearing firm, critical banks, and investors to apprise them of its financial status. If the firm determines that it may be unable to meet its obligations to those counter-parties or otherwise continue to fund operations, the firm will request additional financing from its bank or other credit sources to fulfill all obligations to its customers and clients. If the firm cannot remedy a capital deficiency, it will file appropriate notices with its regulators and immediately take appropriate steps. IX. Mission Critical Systems The firm s mission critical systems are those that ensure prompt and accurate processing of securities transactions, including order taking, entry, and access to customer account information. More specifically, these systems include: Ticker Servers, Transaction Servers, Security Servers, Database Interface Server, Database Server, and other associated hubs, routers, communications devices and telephone systems. The firm has primary responsibility for establishing and maintaining its business relationships with its customers and has sole responsibility for the mission critical functions of order taking entry and execution. The firm s clearing firm provides, through contract, the clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts, and the delivery of funds and securities. The firm s clearing firm contract provides that its clearing firm will maintain a business continuity plan and the capacity to execute that plan. The clearing firm represents that it will advise the firm of any material changes to its plan that might affect its ability to maintain the business and presented us with an executive summary of its plan. In the event the clearing firm executes its plan, it represents that it will notify the firm of such execution and provides it equal access to services as its other customers. If the firm reasonably determines that its clearing firm has not or cannot put its plan in place quickly enough to meet its needs, or is otherwise unable to provide access to such services, the clearing firm represents that it will assist the firm in seeking services from an alternative source. The clearing firm represents that it backs up its records at a remote site. The clearing firm represents that it operates a back-up operating facility in a geographically separate area with the capability to conduct the same volume of business as its primary site. The clearing firm has also confirmed the effectiveness of its back-up arrangements to recover from a wide scale disruption by testing, and it has confirmed that it has tested and continues to test its back-up arrangements. Recovery-time objectives provide concrete goals to plan for and test against. They are not, however, hard and fast deadlines that must be met in every emergency situation, and various external factors surrounding a disruption, such as time of day, scope of

5 disruption, and status of critical infrastructure particularly telecommunications can affect actual recovery times. Recovery refers to the restoration of clearing and settlement activities after a wide-scale disruption; resumption refers to the capacity to accept and process new transactions and payments after a wide-scale disruption. The clearing firm has the following SBD recovery time and resumption objectives: recovery time period of 24 hours. Our Firm s Mission Critical Systems 1. Order Taking The firm only is broker-dealer of record for trades placed electronically directly by customers and any direct contact by firm personnel with customers for services is rare. During an SBD the firm will continue to take orders through the standard means, or any of the other acceptable methods indicated above that are available and reliable. Customers will be informed of alternatives by , facsimile, telephone or standard mail. 2. Order Entry Currently, the customer places orders electronically through various exchanges and ECN s. Then, once executed, the firm sends the orders to its clearing firm electronically or telephonically. In the event of an internal SBD, the firm will enter and send records to its clearing firm by the fastest alternative means available, which include facsimile and/or regular mail delivery, if all other means are unavailable. In the event of an external SBD, the firm will maintain the order in electronic or paper format, and deliver the order to the clearing firm by the fastest means available when it resumes operations. In addition, during an internal SBD, the firm may need to refer its customers to deal directly with the clearing firm or another firm for order entry. 3. Order Execution The firm currently executes orders electronically In the event of an internal SBD; the firm would refer its customers directly to the clearing firm for order entry. In the event of an external SBD, customers would be referred directly to, a registered representative at the firm, for further handing of customer orders. 4. Other Services Currently Provided to Customers In addition to those services listed above in this section the firm also provides telephone client support to its customers. In the event of an internal SBD, the firm would enlist the support of SBC (off-site). In the event of an external SBD, the firm would facilitate the assistance of SBC.

6 B. Mission Critical Systems Provided by Our Clearing Firm The firm relies, by contract, on its clearing firm to provide the maintenance of customer accounts, delivery of funds and securities, and access to customer accounts. The firm has obtained and reviewed the clearing firm s Business Continuity Plan, a copy of which is available on their website. X. Alternate Communications Between the Firm and Customers, Employees, and Regulators A. Customers The firm may communicate with its customers using telephone, , mail and facsimile. In the event of an SBD, the firm will assess which means of communication are still available to it, and use the means closest in speed and form (written or oral) to the means that it has used in the past to communicate with the other party. For example, if the firm has communicated with a party by but the Internet is unavailable, the firm s representative may call them on the telephone or follow up where a record is needed with facsimile or paper copy in the U.S. mail. B. Employees The firm now communicates with its employees using the telephone, , and in person. In the event of an SBD, the firm will assess which means of communication are still available to it, and use the means closest in speed and form (written or oral) to the means that it has used in the past to communicate with the other party. The firm will also employ a call tree so that senior management can reach all employees quickly during an SBD. The call tree includes all staff home and office phone numbers. The person to invoke use of the call tree is: Mark Cherlin C. Regulators The firm is currently a member of FINRA. The firm communicates with its regulators using the telephone, , fax, U.S. mail, and in person. In the event of an SBD, the firm will assess which means of communication are still available to it, and use the means closest in speed and form (written or oral) to the means that it has used in the past to communicate with the other party. XI. Critical Business Constituents, Banks, and Counter-Parties A. Business constituents The firm will contact its critical business constituents and determined the extent to which it can continue its business relationship with them in light of the internal or external SBD. The firm will quickly establish alternative arrangements if a business constituent can no

7 longer provide the needed goods or services when it needs them because of a SBD to them or the firm. B. Banks The firm will contact its bank, lenders and investors to determine if they can continue to provide the financing that the firm will need in light of the internal or external SBD. The bank maintaining the firm s operating account is: Compass Bank, Dallas, Texas. If the firm s banks and other lenders are unable to provide the financing, it will seek alternative financing immediately from its parent company, NexTrend Technologies, Inc. C. Counter-Parties The firm will contact its critical counter-parties, such as other broker-dealers or institutional customers, to determine if it will be able to carry out its transactions with them in light of the internal or external SBD. Where the transactions cannot be completed, the firm will work with the clearing firm or contact those counter-parties directly to make alternative arrangements to complete those transactions as soon as possible. XII. Regulatory Reporting The firm is subject to regulation by FINRA and the Securities & Exchange Commission (SEC). The firm now files reports with regulators using paper copies in the U.S. mail, and electronically using fax, , and the Internet. In the event of an SBD, the firm will contact the SEC, FINRA, and other regulators to determine which means of filing are still available to it, and use the means closest in speed and form (written or oral) to its previous filing method. In the event that the firm cannot contact regulators, it will continue to file required reports off-site and forward them using U.S. mail, fax machine and until such time as corporate communications are restored. XIII. Disclosure of Business Continuity Plan When the firm s web site is operational the firm discloses in writing a summary of its BCP, on its website. The firm also mails a copy of its BCP to customers upon request. The summary addresses the possibility of a future SBD and how the firm plans to respond to events of varying scope. In addressing the events of varying scope, the summary (1) provides specific scenarios of varying severity (e.g., a firm-only business disruption, a disruption to a single building, a disruption to a business district, a city-wide business disruption, and a regional disruption); (2) states whether the firm plans to continue business during that scenario and, if so, the planned recovery time; and (3) provides general information on the intended response. The summary discloses the existence of back-up facilities and arrangements. The plan is subject to modification and an updated summary will be promptly posted on the firm s Web site, and customers may alternatively obtain updated summaries by requesting a written copy by mail.

8 XIV. Updates and Annual Review The firm will update this plan whenever it has a material change to operations, structure, business or location or clearing firm. In addition, the firm will review this BCP in the month of January of each year, to modify it for any changes in its operations, structure, business, or location or clearing firm. XV. Senior Manager Approval Senior management has approved this Business Continuity Plan as reasonably designed to enable the firm to meet its obligations to customers in the event of an SBD.