Lek Securities has developed a Business Continuity Plan to provide procedures for response and recovery in the event of a significant business disruption. The purpose of the Plan is to identify responsible personnel in the event of a disaster; safeguard employees' lives and firm property; evaluate the situation and initiate appropriate action; recover and resume operations to allow continuation of business; provide customers with access to their funds and securities; and protect books and records. The Plan was developed considering the types of business conducted, systems critical to support business, and geographic dispersion of offices and personnel.
Designation of Responsibilities
The following is a list of those responsible for Lek Securities' Business Continuity Plan.
|Responsibility||Title or Department|
|Maintain and update Plan||Designated supervisor|
|Approve Plan and Plan revisions; conduct annual review||Firm officer|
|Annual testing of Plan||Designated supervisor|
|Implementation of Plan when a disruption occurs||Emergency Response Team|
|Quarterly review of Emergency Contact Persons and report changes to regulators||Designated supervisor|
|Maintain and distribute Emergency Contact List||Technology staff|
|Maintain and update Books and Records Chart||Technology staff|
|Post Plan disclosure on Lek Securities' web site and update, as required||Technology staff|
Review critical third party assurances or disaster plans or plan summaries:
Initial engagement of third party
Annually when Lek Securities' Plan is reviewed
|Review critical third party assurances or disaster plans or plan summaries annually when Lek Securities' Plan is reviewed||Technology staff|
Retention and Location of The Plan
- Copies of the current and prior versions of the Business Continuity Plan are retained as follows.
- Copies are dated as of the effective date of the version of the Plan.
- Back-up copies are retained off-site at the homes of responsible employees.
Implementation of the Plan
The Plan has been designed to be implemented in the event of a disaster that results in a significant business disruption. Whether all or only parts of the Plan are implemented depends on the nature of the disruption. Generally, a significant business disruption would include:
- Destruction of one of Lek Securities' offices or facilities, whether by natural causes or by other means
- Loss of life or major injuries to personnel in an office location that disables that office's ability to conduct business
- Disruption of service from a critical service provider
- Disruption of service due to wide-ranging regional outages such as a power outage
Emergency Response Team
Lek Securities has designated an Emergency Response Team that is responsible for implementing necessary procedures included in this Plan. The Response Team's action will depend on the nature and scope of the disruption. The "first responder" has the primary responsibility for taking action, and the "secondary responder" acts as a back-up in the event the first responder is unable to act. Where feasible, the two responders are located in different office locations.
Emergency Contact List
Lek Securities has established an Emergency Contact List that includes the names, phone numbers (cell and land lines), e-mail addresses, and other contact information for individuals critical to Lek Securities' business including key employees, key vendors or service providers, regulators, insurance carriers, banks, attorneys, and other key contacts. A copy of the List is provided to each member of the Response Team and other key personnel. This list will be reviewed and updated on at least an annual basis by designated employee involved with day to day technical operations.
Alternative Business Locations
In the event employees can no longer conduct business at one of Lek Securities' office locations, the following actions may be taken:
- Transfer employees to the Chicago and notify personnel
- Transfer critical systems to another office or a back-up firm or system
- Transfer business operations to another Lek Securities office unaffected by the disruption
- Transfer business operations to a different broker-dealer or other entity
Back-up office will be at Chicago branch office.
Data Back-Up and Recovery
Lek Securities maintains its books and records in both hard copy and electronic format. The Books and Records chart (Appendix A to the Plan) indicates whether records are maintained in hard copy or electronic form; location of primary records; and back-up site for records.
In the event of an internal or external significant business disruption that causes the loss of Lek Securities' records (whether hard copy or electronic records), back-up records will be recovered from the back-up site.
Mission Critical Systems
Mission critical systems are systems that are necessary to ensure prompt and accurate processing of securities transactions including order taking, entry, execution, comparison, allocation, clearance and settlement, maintaining customer accounts, and providing access to customer funds and securities.
The Mission Critical Systems chart (Appendix B to the Plan) identifies systems (or generally describes procedures) that are critical to the operation of Lek Securities' business; identifies third parties that provide those systems; and potential alternate procedures or systems for handling these critical functions in the case of a disruption.
Financial And Operational Assessments
The following describes procedures for assessing changes in operational, financial, and credit risk exposures in the event of a significant business disruption.
In the event of a significant business disruption, alternative systems will be implemented to communicate with customers, employees, critical business constituents (banks, counter-parties, etc.), regulators, and other key parties depending on the nature and impact of the disruption. Communication systems are described in the section "Alternative Communications."
Financial And Credit Risk
In the event of a significant business disruption, Lek Securities' financial status will be evaluated to determine the need for additional financing or identify capital deficiencies including the following:
- Review the impact of the disruption on Lek Securities' ability to conduct business
- Identify inability to satisfy obligations with counter-parties
- Contact banks or other counter-parties to secure needed additional financing
- Notify regulators of capital deficiencies
- Reduce or cease business as may be required due to capital deficiencies or inability to conduct business
- Transfer business to other financial institutions until Lek Securities may resume conducting business
Lek Securities may use a wide range of communication systems to communicate with its customers, employees, counter-parties, and regulators including telephone; mail; fax; e-mail; vendor systems (such as Bloomberg); and personal meetings. Procedures for instituting alternative communications in the event of a significant business disruption include the following, depending on the nature of the disruption:
- Identify the most expedient remaining means of communication
- Notify employees if an off-site command center has been activated
- Notify employees of alternative communication systems to be used
- Transfer communications to another firm
Determination of what communication system will be used depends on the nature of the disruption and which communication systems (electronic mail, telephone calls, etc.) are functional and the availability of personnel in the event telephone contact is necessary.
Between Customers And Lek Securities
In the event of a significant business disruption that disables communications systems, alternative system procedures will be implemented, including the following:
- Identify the most expedient remaining means of communication
- Notify employees regarding how to contact customers
- Contact customers about how to enter orders, how to access accounts and account assets, and other alternative business operations
Between Lek Securities And Its Employees
In addition to the above, Lek Securities has developed a system to enable senior management to contact employees in the event of an emergency. The system is proprietary and confidential
Between Lek Securities And Regulators
Communications with regulators will be conducted using the most expedient available communication system. The designated Response Team person will contact regulators regarding any major business disruption and plans for continuing business.
Business Constituent, Bank, And Counter-Party Impact
This section describes business continuity procedures regarding third parties that are critical to the conduct of Lek Securities' business. In most instances, contracts with critical third parties will include assurances regarding the third party's disaster recovery plans. A disruption impacting Lek Securities' ability to conduct business may occur either at Lek Securities itself or at the third party. The Business Constituent, Bank, And Counter-Party chart (Appendix C to the Plan) identifies key parties and potential alternatives in the event of a disruption.
- Determine whether the third party is able to continue providing critical services.
- If not, identify and contact an alternate third party to provide services.
Banks And Other Financial Institutions
- Determine whether the bank/financial institution is able to continue providing financing.
- If not, identify and secure alternative financing.
- Determine whether transactions may be completed with counter-parties.
- If not, contact counter-party directly to make alternative arrangements to complete transactions.
Accepting Customer Orders
In the event Lek Securities' systems for accepting customer orders are disrupted, alternative systems will be communicated to customers and to employees including, where appropriate:
- Accepting orders by telephone or other alternative means
- Accepting orders by telephone or other alternative means
- Communicating orders to trading desks (internal or external) or order execution systems by telephone or other alternative means
Prompt Access To Funds And Securities
When customer access to funds and securities is impacted by a significant business disruption, customers will be notified by whatever expedient means is available (telephone, e-mail, etc.) regarding who may be contacted to request funds or securities. If Lek Securities is unable to continue business operations, customers will be notified of an alternative financial institution where they may conduct business and access their funds and securities.
In the event SIPC liquidation of Lek Securities' business is required, designated personnel will work with the SIPC-appointed trustee to wind down Lek Securities' operations and transfer customer funds and securities.
Education Of Employees
The Business Continuity Plan is communicated to employees as follows:
- A summary is included in the chapter GENERAL EMPLOYEE POLICIES in the section Emergency Business Recovery Procedures and is provided to all employees
- A current copy of the Plan is provided to the Emergency Response Team and key employees with responsibilities for aspects of the Plan.
- The most recent Emergency Contact List is provided to key employees.
Updating, Annual Review, And Testing
The Plan will be reviewed on at least an annual basis and revised as needed. Each revision will be approved by the designated senior manager and copies of the revised Plan distributed to the Emergency Response Team and key employees. Some material events require updating the Plan when they occur, including:
- Material changes to Lek Securities' business
- A change in Lek Securities' main office location
- Added office locations
- A change in a major service provider
When the Plan is reviewed, the procedures and accompanying lists and charts will be reviewed and updated as needed including the:
- Plan itself
- Emergency Response Team list
- Emergency Contact List
- Books and Records chart (Appendix A)
- Mission Critical Systems chart (Appendix B)
- Business Constituent, Bank, and Counter-Party chart (Appendix C)
- Designation Of Offices section of the chapter DESIGNATION OF SUPERVISORS AND OFFICES
- Any other charts or information related to the Plan
A written record of the annual review including the date reviewed and name and signature of the reviewer will be retained by Compliance.