FACT SHEET

Improving Systems Compliance and Integrity

SEC Open Meeting
March 7, 2013
Background
Today’s securities markets rely extensively on technology more than ever before. As with any industry, the
consequences can be significant when technology goes awry.
The high-speed automated trading that occurs both on national securities exchanges and alternative trading systems
has heightened the potential for a technological problem to broadly impact the market.
Following the Flash Crash in May 2010, the SEC approved a series of measures to help limit the impact of such
technological errors. For instance, the SEC approved rules to halt trading when a stock price falls too far, too fast as
well as rules to provide certainty in advance of when an erroneous trade would be broken and rules to eliminate stub
quotes.
Additionally, the SEC approved a rule known as the market access rule, which requires brokers and dealers with
market access to put in place risk management controls and supervisory procedures designed to manage the
financial, regulatory, and other risks posed to the markets by a malfunctioning of their technological systems.

Automation Review Policy

There are no mandatory rules governing the automated systems of self-regulatory organizations, such as national
securities exchanges, clearing agencies, FINRA, and the MSRB. Instead, for the past two decades, they have
followed a voluntary set of principles articulated in the SEC’s Automation Review Policy and participated in what is
known as the ARP Inspection Program.
Recent technological issues in the securities markets including those that arose during the initial public offerings of
Facebook and BATS Global Markets as well as the Knight Capital trading incident have shown that investors can be
put at risk when technology fails, and confidence in the markets can falter.
The SEC convened a roundtable in October 2012 to discuss how market participants could prevent or at least
mitigate systems issues, and how the response to such issues could be improved. The market closures following
Superstorm Sandy also highlight the importance of having a robust market technology infrastructure. These events
and discussions have helped shape the development of the rulemaking being proposed today.

Proposed Rule — Regulation SCI

The set of rules proposed by the Commission — called Regulation Systems Compliance and Integrity (Regulation
SCI) — would formalize and make mandatory many of the provisions of the SEC’s Automation Review Policy that
have developed during the last two decades. The proposed rule applies the policy and proposes additional measures
to entities at the heart of U.S. securities market infrastructure in order to protect that infrastructure.
Regulation SCI would seek to ensure:
 Core technology of national securities exchanges, significant alternative trading systems, clearing agencies, and
plan processors meet certain standards.

 These entities conduct business continuity testing with their members or participants.

 These entities provide certain notifications regarding systems disruptions and other types of systems issues.
Regulation SCI is intended to reduce the chance of technology problems occurring in the first place and ensure that
key entities are well-positioned to take appropriate corrective action if problems do occur.
Proposed Scope
The proposed rule would apply to “SCI entities,” a term that would include:
 Self-regulatory organizations (the registered national securities exchanges, registered clearing agencies, FINRA,
and MSRB).

 Alternative trading systems that exceed specified volume thresholds (SCI ATSs).

 Disseminators of market data under certain National Market Systems plans (“plan processors”).

 Certain clearing agencies exempt from SEC registration.

It would apply primarily to the systems of SCI entities that are core to the functioning of the securities markets, such
as those that directly support trading, clearance and settlement, order routing, market data, regulation, or
surveillance.
Proposed Provisions
Under the proposed rule, each SCI entity would be required among other things to:
 Establish policies and procedures relating to the capacity, integrity, resiliency and security of its technology
systems.

 Establish policies and procedures to ensure its systems operate in the manner intended, including in compliance
with relevant federal securities laws and rules.

 Take timely corrective action in response to systems disruptions, systems compliance issues and systems
intrusions.

 Notify and provide the SEC with detailed information when such systems issues occur as well as when there are
material changes in its systems. Written notices would be filed electronically on new Form SCI.

 Inform its members or participants about certain systems problems and provide information about the systems
and market participants affected by the problem and the progress of corrective action.

 Conduct an annual review of its compliance with Regulation SCI, and submit a report of the annual review to its
senior management and the SEC.

 Designate certain individuals or firms to participate in the testing of its business continuity and disaster recovery
plans at least once annually, and coordinate such testing with other entities on an industry- or sector-wide basis.

 Provide SEC staff with access to its systems to assess compliance with Regulation SCI.
CAREER OPPORTUNITIES IN FINANCE
Corporate Finance
Corporate finance jobs involve working for a company in the capacity of finding and
managing the capital necessary to run the enterprise. This is done while maximizing
corporate value and reducing financial risk.

The functions you may implement while in such a position include:

 Setting up a company's overall financial strategy

 Forecasting profits and losses
 Negotiating lines of credit
 Preparing financial statements
 Coordinating with outside auditors

More sophisticated corporate finance jobs might involve mergers and

acquisitions activity, such as calculating the value of an acquisition target or determining
the value of a division for a spinoff. Corporate finance positions can be found in
companies of all sizes, from large international entities to small startups. Additional
corporate finance positions include financial analysts, treasurers and internal auditors.

Commercial Banking
Commercial banks, which include large entities to local institutions, offer a range of
financial services, from checking and savings accounts to IRAs and loans. Career
options available in this sector include bank tellers, loan officers,
operations, marketing and branch managers.

Talented professionals can advance from a local branch job to a position in corporate
headquarters. Such a promotion would expose you to a number of other areas, such
as international finance.

Investment Banking
Some of the most glamorous – and intense – financial careers are jobs in investment
banking. Investment banking jobs deal with facilitating the issuance of
corporate securities and making these securities available for investors to purchase, all
while trading securities and providing financial advice to both corporations and wealthy
individual investors.

Typically, investment banking firms have a number of divisions and groups with many
different objectives and responsibilities. Working in a traditional investment banking firm
would allow you to interact with issuers of securities, mergers and acquisitions
professionals, or the trading desk, which trades stocks, bonds and other securities in
the secondary market.

Hedge Funds
Hedge funds are largely unregulated private investment funds whose managers can buy
or sell a wide array of assets and financial products. Because of the mystery that
surrounds this type of entity, hedge fund jobs are also considered by many to be
somewhat glamorous.

Typical hedge fund jobs include:

 Financial analyst
 Trader
 Regulatory compliance officer
 Quantitative analyst
 Marketing manager
 Portfolio manager

Private Equity and Venture Capital

Private equity professionals help businesses find capital for both expansion and current
operations. They also provide financing for a number of corporate business
transactions, such as managed buyouts and restructurings.

At times, a private-equity job may involve working as an interim executive at a struggling

company, where your success helps determine the fate of the company.

Venture capital professionals (VCs) spend most of their time with startups or small, fast-
growth companies. Venture capital firms evaluate pitches by founders and small-
company leaders to determine if the firm will make an investment. Sometimes referred
to as "vulture capitalists," VCs are known to structure deals that favor the investor, not
the company receiving funding.

The hope of the VC is that the funded company will some day go public – that is, make
its stock available on the public stock market. Venture capital is a tough
business wherein the failure rate is high, but the rewards, if they are realized, can be
huge.

Financial Planning
Financial planners help individuals develop plans that will ensure their present and
future financial stability. Typically, they review a client's financial goals and generate an
appropriate plan for saving and investing that fits the client's individual needs. The plan
may focus on wealth preservation or investment growth and may even include estate
and tax planning.

Most financial planners work in either large, nationwide groups or smaller, locally based
firms. Some planners charge flat fees, others a percentage of assets under
management, receiving commissions on the products they sell (such as mutual funds).

Generally, financial planners with the Certified Financial Planner (CFP) designation are
the most in-demand, as they must obtain three years of financial-planning experience,
pass several exams (including a two-day, 10-hour case-study exam) and meet
continuing-education requirements.

Insurance
Finance jobs in the insurance industry involve helping businesses and individuals
anticipate potential risks and protect themselves from losses. Most insurance jobs are
with large insurance companies. You could begin a career in this sector working as a
sales rep selling insurance policies, as a customer service rep working with existing
clients, or as an actuary computing risks and premium rates according to probabilities
based on historical, quantitative data sets.

Public Accounting
The field of public accounting is broad, with many opportunities. Public accountants help
businesses and individuals keep track of their finances according to generally accepted
accounting principles (GAAP). Public accountants record business transactions, help
prepare financial statements, audit financial records, prepare income tax returns, and
provide related consulting services.

Accountants generally work in partnerships. The largest partnerships are known as

the Big Four (previously the Big Eight and the Big Six) and include Deloitte Touche
Tohmatsu, PricewaterhouseCoopers (PwC), Ernst & Young and KPMG. But many jobs
also exist at many smaller firms. Typically, new hires start as a staff accountant, then
advance to audit manager, then tax manager and, eventually, if they can maintain the
tough working schedule for many years, a partner in the firm.

Read more: Financial Career Options For Professionals |

Investopedia https://www.investopedia.com/articles/financial-careers/08/financial-
career-options-professionals.asp#ixzz5Tfv1LLix
  Chartered Financial Analyst (CFA) certification.
 Financial Risk Manager (FRM) Certification.
 Certified Financial Planner (CFP) Certification.
 Financial Modeling Certification.
 Certified Credit Professional (CCP)
 Chartered Global Management Accountant (CGMA)
 Certified Information Systems Auditor (CISA)