“The rules adopted today mark an historic shift in the Commission’s regulation of the US securities markets that will better protect investors by requiring comprehensive new controls for the technological systems that form the core of our current markets,” SEC chair Mary Jo White said in a statement.

As technology and automated systems are crucial for today’s securities markets, the effect of failures can be large, the SEC said, referring – without identifying specific examples - of “recent technology issues in the markets” that hit end-investors.

Under Regulation SCI, self-regulatory organizations, certain alternative trading systems, plan processors, and certain exempt clearing agencies must have “comprehensive policies and procedures in place for their technological systems”, the SEC statement said.

“The rules also provide a framework for these entities to, among other things, take appropriate corrective action when systems issues occur; provide notifications and reports to the SEC regarding systems problems and systems changes; inform members and participants about systems issues; conduct business continuity testing; and conduct annual reviews of their automated systems,” it said.

The rules take effect 60 days after they have been published in the Federal Register.
Entities will have 21 months from the effective date to comply with the industry- or sector-wide coordinated testing requirement, the SEC added.