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SEC Approves Rule Requiring Technology Safeguards

Joe Mont | November 19, 2014

Despite concerns that it may be too limited in its current form, the Securities and Exchange Commission on Tuesday unanimously approved Regulation SCI, new rules intended strengthen the technology infrastructure of securities markets, improve their resilience, and enhance the Commissions’ ability to oversee them.

Regulation SCI (the acronym stands for “systems, compliance, and integrity”) requires exchanges and clearing houses to have policies and procedures in place to maintain and secure their technology. It replaces a voluntary program for exchanges and self-regulatory organizations that dates back to 1989. In particular, the rule looks to minimize the affect of So-called “flash crashes” that have become more common as automated trading gets faster and faster.

The final rule requires covered firms to ensure that their systems have adequate levels of “capacity, integrity, resiliency...

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