CESR and ECB Standards for Business Continuity Planning in Europe
In a September 2004 report issued by The Committee of European Securities Regulators and the European Central Bank, the two organizations set forth standards for securities clearing and settlement in the European Union. As part of the standards, the organizations explained that operational risk that arises in the clearing and settlement process should be minimized through appropriate business continuity and disaster recovery plans. In "Standard 11", the report identifies some of the following key elements (applicable to central securities depositories "CSD", central counterparties "CCP" and significant custodians) to ensure a timely recovery of operations and completion of the settlement process in the event of a disruption:
- Business continuity plans and back-up facilities should be established to ensure that business can resume as soon as possible after a disruption, but no later than two hours after a disruption occurs. These back-up facilities should also be located at an appropriate distance from the primary site.
- It is critical that back-up systems are interoperable with other back-up systems and markets should keep up to date with improvements in technologies and procedures.
- Business continuity plans should be tested and rehearsed on a regular basis and after any major modifications to the system.
- Alternative means of communication and contact lists (both at local and cross-border level) should be available in order to deal efficiently and promptly with an operational failure.
- In case of a telecommunication network failure, an alternative means of communicating and sharing information within the institution and across institutions should be in place.
The aforementioned issues are subject to further review by regulatory authorities and have been and will continue to be addressed through The Bond Market Association's Business Continuity Management Council (BCMC), headed by Peter Poulos of Credit Suisse First Boston. Asset managers were invited to participate in the Council's previous meeting on April 26. During the meeting, buyside and sellside were able to discuss common business continuity plans. Specifically, the group will pursue the development of an emergency file containing contact details for bond professionals at their firms' back up facilities. If your firm is interested in participating in the securities industry's BCP efforts, please contact Joseph Sack or Elisa Nuottajarvi at 646.637.9200.
Accounting Standards in U.S. and Europe move toward Convergence
On April 27, 2005, The Committee of European Regulators (CESR) published a draft document for comment that essentially finds US Generally Accepted Accounting Principles (GAAP) to be equivalent to International Financial Reporting Standards (IFRS), thus demonstrating that the US and the European Union are moving closer toward convergence of accounting standards.
This announcement follows a meeting on April 21in Washington D.C., during which the SEC and the European Union Commission reached agreement on a "roadmap" toward equivalence between International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP). According to a press release, this "roadmap" sets out steps the SEC will take to eliminate the need for companies using IFRS to reconcile to US GAAP standards possibly as soon as 2007, but no later than 2009. For more information, on the SEC and EU April meeting, click on the press releases below.
Register for AMF Bank Loan Workshop and Quarterly Meeting
The Asset Managers Forum will host two west coast/east coast events on May 16 and May 17 in Newport Beach, CA and New York City, NY. On May 16, the Forum will host an educational workshop on Bank Loans and on May 17, the Forum will have its Quarterly Business Meeting. These events will be held simultaneously and broadcast in real-time through video conference and phone. These events are being sponsored by SimCorp, which develops integrated investment and treasury management systems. For more information on these events or to register, please click on the links below.
