Industry-wide 

Disaster Recovery Test

OCTOBER 9, 2004 

Preliminary Results
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2004 FUTURES INDUSTRY DR TEST RES

TEST OBJECTIVES

In April, FIA IT Division hosted meetings with exchanclearing organizations and firms to determine the netest, scope and date:

– Establish the benefits of conducting an indus

test

– Establish a common date for testing between 

futures exchanges and their constituencies

– Test firm back-up to exchange back-up sites– Verify connectivity– Test exchange of a small but meaningful sam

orders
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BACKGROUND BACKGROUND

First industry-wide disaster recovery test in the U.S. financservices sector (due largely to the good working relationshbetween exchanges and firms).While individual testing is common, it was the first time sohad the opportunity to test their back-up sites with the excback-up sites.Committee established and conference calls were held beMay and October (bi-weekly and weekly).

– Clearinghouses– Exchanges– FCMs, clearing firms and non-clearing firms– Key service providers– Independent software vendors

Test briefings were held in Chicago and New York in July/and September
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BACKGROUND BACKGROUND

The test was held Saturday, October 9 fro

The test was held Saturday, October 9 fro

a.m. until 4:30 p.m. EDT a.m. until 4:30 p.m. EDTParticipation in the test was not mandato

Participation in the test was not mandato

Each exchange developed its own test sc

Each exchange developed its own test sc

and recruited member firms. and recruited member firms.To encourage firm participation, FIA agre

To encourage firm participation, FIA agre

to release firm names. to release firm names.Post-test interviews with firms and survey 

test interviews with firms and survey 

were used to determine results. were used to determine results.
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PARTICIPATING PARTICIPATING 

EXCHANGES/CLEARINGHOUS

EXCHANGES/CLEARINGHOU

CBOE Futures ExchangeChicago Board of TradeChicago Mercantile ExchangeEurex USThe Clearing CorporationNew York Board of TradeNew York Clearing CorporationNew York Mercantile Exchange
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2004 FUTURES INDUSTRY DR TEST RES

CBOE FUTURES EXCHANG

Tested connectivity to production CBOEdirect tplatformScripted trade entry for VIX futures contracts.Trades were transmitted to The Clearing Corp.back-up systems.The Clearing Corp. produced end-of-day files atransmitted them to The Options Clearing Corpback-up systems.
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CHICAGO BOARD OF TRAD

Tested connectivity to eCBOT productitrading platform.No order entry–connectivity was confirmvia successful system login message.CME Clearing generated a subset of October 8th trades to member firmsTrade confirmations sent from CME ClearingEFP, change records, PCS and large trrecords were accepted
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CHICAGO MERCANTILE EXCHA

Tested connectivity to GLOBEX production traplatform via CME remote back-up site.Scripted order entry in Eurodollars, Euro FX, Japanese Yen, CPI, Goldman Sachs Index, HNASDAQ, NASDAQ eMini, S&P and S&P eMfutures contracts.Ex-pit, block trade information was received vCME remote site portal URL.Trade reporting and SPAN files were generatefrom 10/7 trade date.PCS and large trader information were submitmember firms.Trade registry data and SPAN files were accevia FTP.
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THE CLEARING CORP.

Tested firm connectivity to back-up clearing syNo scripted trade entry—confirmed system connectivity via successful system login messPrevious business day clearing reports were transmitted to member firms:

– Match off files– Report files– SPAN files

PCS, ex-pit and large trader information was naccepted.
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EUREX US

Tested firms connectivity to Eurex production trading platform.No scripted order entry—connectivity was convia successful system login message.The Clearing Corp. transmitted the previous business day’s clearing reports:

– Match off files– Report files– SPAN files
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NEW YORK BOARD OF TRA

Tested firm connectivity to NYBOT back-utrading floor and back-up Electronic Order Routing system.Scripted order entry for cotton and sugar fcontracts.Order entry via back-up phone lines, NYBOEOR and member firms’ order routing systMembers phones forwarded to NYBOT batrading floor facilityTrade entry via TIPS system for test tradespit, large trader and PCS information.NYCC produced end of day files:

– Match off files, report files and SPAN fil
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NEW YORK MERCANTILE EXCH

Tested firm connectivity to eACCESS back-up trading platform.Order entry via scripted trade entry in Crude ONatural Gas, Heating Oil, Gasoline, Silver and futures contracts.Fill reporting to member firms.End-of-day clearing reports produced via NYMClearing:

– Ex-pit, PCS, large trader information– 591 Member Trade Register report
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OVERALL TEST RESULTS

Seven U.S. futures exchanges and clearinghouses more than 80 firms participated in the testOrganization # of firms tested % of total vol

– CBOE Futures 6 35%– CBOT 58 97%– CME 52 98%– Clearing Corp. 24 39%– Eurex US 32 38%– NYBOT/NYCC 28 99%– NYMEX/COMEX 36 90%+Firms tested represent 96% of the U.S. trading volum
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LESSONS LEARNED

Test objectives were met with improvemenidentified for next exercise.Support for industry-wide disaster recovertesting strong.Feedback from member firms, exchanges clearinghouses indicates this was a valuaband worthwhile exercise.The industry should do more common testthe future.
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2004 FUTURES INDUSTRY DR TEST RES

LESSONS LEARNED (CONT’D

Test design issues: 

– More time for testing– Faster turnaround time on reports– More pre-testing– More support from front-end vendors– More personnel needed– More coordination among exchange scripts
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2004 FUTURES INDUSTRY DR TEST RES

LESSONS LEARNED (CONT’D

Disaster Recovery glitches uncovere

Disaster Recovery glitches uncovere

during the test: during the test:

• MQ, FTP and RJE connectivity to exchange/clea

MQ, FTP and RJE connectivity to exchange/clea

house post house post-trade processes trade processes

• Incorrect/invalid network router addressing Incorrect/invalid network router addressing • Invalid network IP addresses Invalid network IP addresses• Invalid/outdated passwords Invalid/outdated passwords• Exchange Exchange’s control center phone system s control center phone system
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2004 FUTURES INDUSTRY DR TEST RES

LESSONS LEARNED (CONT’D

Industry DR professionals said that the test:

– Helped them document more business continuity 

procedures.

– Allowed them to test connectivity with the exchan

site.

– Heightened awareness internally of DR/BC issue– Uncovered single points of failure.– Underscored the need for cross-training.
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2004 FUTURES INDUSTRY DR TEST RES

LESSONS LEARNED (CONT’D

Large Broker/Dealer Perspective:

– It is far too operationally risky to test from disaste

recovery sites. At best B/Ds tested connectivity fsites.

– The need for an national “industry-wide” test, as o

to regional tests, is not apparent, particularly sincclearing cycles were run.

– Making available multiple weekend dates to coor

external and internal DR tests very desirable.

– Number of staff required for a single “industry” te

prohibitive. How many “industries” are we in?
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2004 FUTURES INDUSTRY DR TEST RES

NEXT STEPS NEXT STEPS

Finalize results Finalize resultsSurvey firms and exchanges for input o

Survey firms and exchanges for input o

future tests future testsForm disaster recovery test steering Form disaster recovery test steering committee committeeDetermine test plan for 2005 Determine test plan for 2005

– Tentative date: October 15, 2005 Tentative date: October 15, 2005