For Release: June 7, 1999
COMMODITY FUTURES TRADING
COMMISSION YEAR 2000
CONTINGENCY PLANNING FOR COMMISSION REGISTRANTS
In Advisory 55-97, dated November 4, 1997, the Commodity Futures Trading Commission (Commission) reminded futures commission merchants (FCMs) and introducing brokers (IBs) of their duty under Commission Regulation 1.16(e)(2) to report any "material inadequacies" vis-à-vis Year 2000 (Y2K) preparation. The Commission also reminded commodity pool operators (CPOs) and commodity trading advisors (CTAs) of their duty under Commission Regulations 4.24(w) and 4.34(o), respectively, to disclose "material information" pertaining to Y2K preparation. That Advisory listed the following four minimum phases for a sound Y2K preparedness plan: (1) Identification of systems that are Y2K vulnerable; (2) Update of the systems; (3) Testing; and (4) Contingency planning. This Advisory addresses contingency planning, the final phase of Y2K preparation. The Commission is issuing this Advisory to provide registrants with more detailed guidance and to diminish the potential of any serious Y2K disruption that could warrant Commission action to maintain or restore orderly markets.
There are a multitude of potential events within the futures industry, across other sectors in the United States and internationally that could impair the functions of registrants. A written contingency plan is critical in planning to address malfunctions. Accordingly, each FCM, IB, CPO and CTA must have a written contingency plan no later than September 1, 1999, and must be prepared to provide its contingency plan to the Commission and the registrant's self-regulator upon request. Because FCMs, IBs, CPOs and CTAs range from large multinational organizations to one-person operations, the Commission recognizes that the scope and contents of each contingency plan will vary to reflect the individual circumstances of the particular registrant. However, at a minimum:
The Commission is aware that many registrants already have begun planning to address disruptive events that may occur during the transition to the new millennium and in particular over the millennium weekend. These contingency plans likely will continue to be modified throughout the year. The principles set forth in this advisory are intended to provide guidance to registrants in developing their Y2K contingency plan. The manner in which the principles are implemented will vary greatly based on the category of registrant, its size and its dependencies on third parties.
1. Command Center
2. Critical Systems
For each critical system:
3. Notification Chain
4. Customer Relations Issues
5. Third Party Contingencies
6. Validating the Contingency Plan
Registrants should validate their contingency plan, as appropriate, by:
Questions regarding this Advisory should be addressed to France M.T. Maca (202) 418-5482 [fmaca@CFTC.gov]; Susan Elliott (202) 418-5464 [selliott@CFTC.gov]; or Martha A. Mensoian (202) 418-5246 [mmensoian@CFTC.gov]