The Securities and Exchange Commission has issued a policy statement setting forth its view that U.S. self-regulatory organizations operating trading markets and electronic communication networks should apply certain basic principles in their business continuity planning.

The principles outlined in the Policy Statement include planning for the resumption of trading no later than the next business day following a wide-scale disruption, geographic diversity between primary and backup sites, assuring the full resilience of important shared information systems (such as the consolidated market data stream), and confirming the effectiveness of backup arrangements through testing.

It says that each SRO market and ECN should implement plans reflecting these principles as soon as practicable, hopefully by the end of 2004. SEC staff intends to engage in an ongoing dialogue with each SRO market and ECN to discuss application of these principles for the particular market.

The commission says that it believes it important for the SRO markets and ECNs to take concrete steps to strengthen their resilience to address the continuing, serious risks to the U.S. financial system.

“To date, the trading markets have made significant progress in increasing the robustness of their business continuity plans,”it says. “By applying the principles outlined in the policy statement, the commission believes the SRO markets and ECNs will better assure their own resilience and that of the U.S. financial system.”

The SEC is seeking comments on the policy statement.