Sandy-hit Wall Street faces questions over contingency plans
01 November 2012 | 5950 views | 6
As trading resumed in New York after a two-day Hurricane Sandy-inflicted pause, the effectiveness of Wall Street's back-up plans to deal with disasters was being called into question.
With business slowly getting back to normal, recriminations were soon flying over the failure to implement contingency plans, with former Securities and Exchange Commission chairman Arthur Levitt leading the way.
Levitt savaged the New York Stock Exchange, telling Bloomberg radio that "to see the exchange go down for two days without an adequate backup plan is very, very unfortunate".
As Sandy approached New York, Nyse had intended to revert to its contingency plan of moving all trading to its Arca electronic platform. However, this idea was ditched amid concerns over employee safety and the potential for malfunctions among market participants still spooked by recent technical glitches such as the Knight Capital debacle.
While most exchanges have back-up data centres located well away from their primary site, Nyse's contingency plan is the Arca system. Levitt though, told Bloomberg: "If you're going to have a stock exchange, it should have a backup facility of some sort so that regional events don't cause its closure."
Meanwhile, Knight Capital again found itself in trouble after a back-up generator in Jersey City failed yesterday afternoon, forcing the company to tell clients to route stock orders away from it.
Much of Wall Street was operating on backup generators yesterday and - despite the Knight issue - Nyse Euronext COO Larry Leibowitz told Reuters that "as a whole, it's actually going quite well. We haven't heard of widespread problems."
According to the FT, the SEC is now planning to "raise concerns" with trading firms about their contingency plans as part of its ongoing review of the market.
Meanwhile, among the Wall Street firms worst hit by Sandy is Citi, which says its office at 111 Wall St - which houses around 1800 operations, technology and administrative employees - will be unusable for weeks.