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FUTURES INDUSTRY BUSINESS CONTINUITY AND DISASTER RECOVERY 2007 INDUSTRY TEST RESULTS DR IV November

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Test round-trip communications capabilities. ... Post-test interviews with firms and survey forms were used to fine tune the results. ... – PowerPoint PPT presentation

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Title: FUTURES INDUSTRY BUSINESS CONTINUITY AND DISASTER RECOVERY 2007 INDUSTRY TEST RESULTS DR IV November


1
FUTURES INDUSTRY BUSINESS CONTINUITY AND
DISASTER RECOVERY2007 INDUSTRY TEST RESULTSDR
IV November 5, 2007Compiled and Developed by
Tellefsen and Company, L.L.C.
2
TABLE OF CONTENTS
Page Number
  • Background 3
  • Executive Summary 8
  • Overall Test Results 12
  • Problems Encountered 27
  • Lessons Learned 29
  • Suggested Next Steps 33

3
I. BACKGROUND
  • The FIA Information Technology Division conducted
    the first annual Disaster Recovery (DR) Test in
    October 2004.
  • Starting in Q2, 2007, the FIA Business Continuity
    Committee began detailed preparations for this
    years third annual industry-wide test.
  • A Working Group was convened to discuss and agree
    on a date, goals, objectives, etc.

4
BACKGROUND (Contd)
  • Two futures Industry BC/DR symposiums were held
    in September in New York and Chicago. Panelists
    included representatives from the major exchanges
    and clearinghouses
  • CBOE Futures Exchange
  • Chicago Board of Trade
  • Chicago Mercantile Exchange/CME Clearing
  • The Clearing Corp.
  • Eurex AG
  • ICE Futures EU
  • ICE Futures US/ICE Clear US
  • Liffe
  • Kansas City Board of Trade/KCBT Clearing Corp.
  • MEFF
  • New York Mercantile Exchange/NYMEX Clearing
  • Philadelphia Board of Trade
  • Winnipeg Commodity Exchange

5
BACKGROUND (CONTD)
  • The scope of this years initiative was designed
    to test disaster recovery back-up connectivity
    and functionality between exchanges,
    clearinghouses and member firms
  • Test firm back-up to exchange back-up sites
    (DR-DR).
  • Verify connectivity.
  • Test round-trip communications capabilities.
  • The symposium sessions were well attended by
    numerous operations managers and BC/DR
    representatives from various clearing and
    non-clearing firms.
  • Regular Committee conference calls were held
    between May and October (bi-weekly and weekly).

6
BACKGROUND (Contd)
  • The Committee including representatives from
  • Clearinghouses
  • Exchanges
  • FCMs
  • Clearing firms
  • Non-clearing firms
  • Key service providers
  • Independent software vendors

7
BACKGROUND (Contd)
  • To encourage participation, the FIA agreed that
    all firm names would be anonymous and test
    results would be without attribution to any firm.
  • Post-test interviews with firms and survey forms
    were used to fine tune the results.

8
II. EXECUTIVE SUMMARY
  • The fourth annual industry-wide disaster recovery
    test in the U.S. financial services sector was
    highly successful, largely in part to the good
    working relationship between exchanges and the
    firms.
  • Major U.S. and international futures exchanges,
    clearinghouses, FCMs and clearing firms
    participated in this years test
  • 103 FCMs, clearing firms and non-clearing firms
    participated - an increase over last year
  • 98 of firms tested successfully
  • Participant firms represent a significant
    critical mass of futures order flow and
    liquidity
  • 88 of overall futures exchanges volume.

9
EXECUTIVE SUMMARY (CONTD)
  • This years test initiative was expanded to
    include several domestic and international
    exchanges
  • ICE Futures EU
  • MEFF
  • Philadelphia Board of Trade
  • Exchanges and clearinghouses demonstrated that
    their systems, processes and procedures
    simultaneously worked very well.

10
EXECUTIVE SUMMARY (CONTD)
  • Feedback from the firms, exchanges and clearing
    houses indicated that this was a valuable and
    worthwhile exercise and that the industry should
    continue to do more common testing in the future.
  • Firms indicated that the test helped them
  • Exercise their Business Continuity/Disaster
    Recovery plans
  • Identify internal single points of failure
  • Tighten up and document their business continuity
    procedures
  • Better understand the need for cross-training
  • Test connectivity with exchanges DR sites

11
TEST PARTICIPANTS REPRESENT A SIGNFICANT OF
EXCHANGES VOLUME
Source Exchanges and Clearing Houses
12
III. OVERALL TEST RESULTS
  • The major domestic and international futures
    exchanges and clearinghouses and 103 firms
    participated in the test
  • CBOE Futures 6
  • CME Group 54
  • Clearing Corp. 23
  • Eurex 66
  • ICE 87
  • ICE Futures US/ICE Clear US 29
  • Kansas City Board of Trade 17
  • Liffe 19
  • MEFF 2
  • NYMEX/COMEX 40
  • Winnipeg Commodity Exchange 14
  • Some firms are common members of multiple
    exchanges and clearing houses. PBOT testing did
    not involve members.

13
OVERALL TEST RESULTS (CONTD)
  • Test participants included both clearing firms
    and non-clearing firms.
  • Approximately 85 of all futures clearing firms
    participated.
  • 98 of firms tested successfully.
  • 92 tested from their Disaster Recovery sites
    and/or via back up communications facilities.
  • The remainder tested from their primary sites.

14
CBOE FUTURES EXCHANGE
  • Tested via member firms back up connectivity to
    production CBOEdirect trading platform.
  • Scripted trade entry for VIX futures contracts.
  • Transmitted trades to the Clearing Corps. back-
    up systems.

15
CHICAGO BOARD OF TRADE
  • Members tested connectivity to eCBOT trading
    system.
  • Participated in post-trade testing and generated
    a subset of October 26th trades to member firms
    from CME Clearing.
  • Injected trades in trade handling system via back
    up site.
  • Transmitted trade confirmations from CME
    Clearing.
  • Accepted EFP, change records, PCS and large
    trader records.

16
CHICAGO MERCANTILE EXCHANGE
  • Tested member firms back-up connectivity to
    production GLOBEX trading platform via CME remote
    back-up site.
  • Entered a script of orders for various products.
  • Received ex-pit, block trade information via CME
    remote site portal URL.
  • Generated trade reporting and SPAN files from
    10/26 trade date.
  • Received PCS and large trader information from
    member firms.
  • Transmitted trade registry data and SPAN files
    via FTP.

17
THE CLEARING CORP.
  • Tested member firms back-up connectivity to
    back-up clearing system.
  • Confirmed system connectivity via successful
    system login message no scripted trade entry.
  • Transmitted previous business day clearing
    reports to member firms
  • Match off files
  • Report files
  • SPAN files
  • PCS, ex-pit and large trader information was not
    accepted.

18
EUREX AG
  • Tested member firms back up connectivity to
    production XCEED electronic trading platform.
  • Connectivity was confirmed via successful system
    log in message no scripted order entry.

19
ICE FUTURES US / ICE CLEAR US
  • Tested member firms back-up connectivity to the
    ICE Trader electronic trading system.
  • Scripted order entry for Cotton and Sugar futures
    contracts.
  • Trade entry via TIPS system for test trades,
    ex-pit, large trader and PCS information.
  • ICE Clear produced end-of-day files
  • Match off files, report files and SPAN files.

20
ICE FUTURES EU
  • Tested member firms back-up connectivity to the
    ICE Exchange electronic trading system DR site.
  • Scripted order entry for Cotton and Sugar futures
    contracts.
  • Tested ICE Block and other non trading
    functionality from DR site.
  • ICE Web reporting via Internet portal for deal
    reporting, position reports, etc.
  • Futures trades submitted to the ICE Clear DR site.

21
KANSAS CITY BOARD OF TRADE
  • Members tested connectivity to eCBOT trading
    system.
  • Participated in post-trade testing.
  • Generated a subset of October 26th trades to
    member firms.
  • Transmitted trade confirmations from KCBT
    Clearing Corp.
  • Accepted EFP, change records, PCS and large
    trader records.

22
LIFFE
  • Tested member firms back up connectivity to
    production CONNECT trading platform.
  • Connectivity was confirmed via successful system
    log in message to central gateways no scripted
    order entry.

23
MEFF
  • Tested via the MEFF production ETS environment.
  • Simulated a failure of their London POP and
    successfully failed over to the backup system
    during the test.
  • Members entered trades and received reports.
  • Transfer files were delivered from clearing, but
    member firms back office systems did not receive
    any test data.

24
NEW YORK MERCANTILE EXCHANGE
  • Tested member firms back-up connectivity to
    GLOBEX trading platform, ClearPort TMS and
    ClearPort Clearing systems.
  • Order entry via scripted trade entry in crude
    oil, natural gas, heating oil, gasoline, silver
    and gold futures contracts.
  • Reported trade fill information to member firms.
  • Transmitted end-of-day clearing reports via NYMEX
    Clearing
  • Ex-pit, PCS, large trader information
  • 591 Member Trade Register report

25
PHILADELPHIA BOARD OF TRADE
  • PBOT conducted an internal test
  • Used the PBOT/XL trading system
  • Trade Orders received at PBOT/XL Help Desk.
  • Fill reports were generated.
  • PBOT trade file processed for clearing and
    settlement.

26
WINNIPEG COMMODITY EXCHANGE
  • Members tested connectivity to eCBOT trading
    system.
  • Participated in post-trade testing.
  • Generated a subset of October 26th trades to
    member firms from Clearing and transmitted trade
    confirmations.
  • Accepted EFP, change records, PCS and large
    trader records.

27
THE MAJORITY OF PARTICIPANTS WERE CLEARING FIRMS
Number of Firms
Source Exchanges and Clearing Houses
28
IV. PROBLEMS ENCOUNTERED
  • A number of problems were encountered, including
  • Incorrect FIX tags impacted routing logic
  • Configuration parameter not set properly on back
    up servers
  • Configuration file issues with ISV systems
  • MQ connectivity/could not generate MQ messages
  • Incorrect IP addresses/incorrect network
    configuration
  • Firewall configuration parameters
  • Member firm hotline was not working initially
  • Exchange trading system not accepting logins
  • Exchange web portal connectivity problems
  • Remote login to clearing system did not work
  • Most were resolved quickly, although some caused
    an unexpected delay to test progress.

29
PROBLEMS ENCOUNTERED (CONTD)
  • Some firms experienced procedural problems with
    invalid or expired passwords, looking at the
    wrong system screens, etc.
  • One exchange had problems with firms access to
    their backup systems, issues with SFTP encryption
    certification.
  • Some firms did not verify that their back up
    servers and equipment was properly functioning
    prior to the test.

30
V. LESSONS LEARNED
  • The futures industry proved that it is capable of
    successfully orchestrating an industry-wide
    disaster recovery test.
  • Most problems that were encountered were
    rectified quickly, although some caused an
    unexpected delay to the restoration of full
    processing capabilities
  • Under real life situations, most problems could
    probably be resolved within hours or by the next
    business day.
  • The exchanges and clearinghouses internal
    support processes and procedures worked well.

31
LESSONS LEARNED (CONTD)
  • Firms indicated that the test helped them
  • Identify some internal single points of failure
  • Tighten up and document their business
    continuity and system fail over procedures
  • Better understand the need for cross-training
  • Test connectivity with exchanges DR sites
  • Pre-test connectivity testing was valuable and
    should be a pre-requisite for future tests.

32
LESSONS LEARNED (CONTD)
  • Firms must be aware of any environmental impact
    on their network fire walls caused by test
    requirements
  • Have proper network staffing support actively
    engaged during the test.
  • Be aware of any firewall impact and make changes
    accordingly to accommodate testing.
  • There is a need to better coordinate testing
    activities
  • More time should be allocated for this during
    future tests.
  • Need to identify and corroborate all test
    contacts prior to the tests.
  • Try to standardize scripts across exchanges.

33
LESSONS LEARNED (CONTD)
  • Need clear support desk procedures and sufficient
    staffing at exchanges to properly support the
    test.
  • A number of firms apparently did not pre-register
    and showed up for the test at several
    exchanges
  • They were set up and most tested successfully,
    however, this placed an additional demand on
    exchange and clearing house support staffs.
  • Additionally, several firms that registered at
    1-2 exchanges were no shows

34
VI. SUGGESTED NEXT STEPS
  • Survey firms and exchanges for input to future
    testing.
  • Announce the details of the 2008 DR test
  • Define the scope of next years scenario test
    exercise
  • Establish the goals and objectives of test
    initiatives
  • Announce dates early in advance
  • Broadly market future test initiatives to
    firms IT, operations, trading and senior
    management, to ensure a wider dissemination of
    test information within all firms.
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