Detailed rules will become effective February 2015, with compliance required by November 2015.

On November 19, 2014, the Securities and Exchange Commission (the Commission) adopted new rules for technology infrastructure in the US securities markets. These rules combine to form Regulation Systems Compliance and Integrity (Regulation SCI). Regulation SCI imposes requirements on key market participants in order to strengthen the markets’ technology infrastructure, reduce the occurrence of systems issues and improve the resiliency for when systems problems do occur.

Executive Summary -

Regulation SCI applies to self-regulatory organizations, certain alternative trading systems (ATSs) that exceed volume thresholds, plan processors, and certain exempt clearing agencies which are currently subject to the Commissions Automation Review Policy (ARP) (collectively referred to as SCI entities). Alternatively, Regulation SCI does not cover securities futures exchanges, the NFA, or ATSs that exclusively trade municipal or corporate debt. While the Commission noted that it would take a “measured approach” towards incremental expansion and it kept the definition of SCI entity fairly narrow, the Commission also acknowledged “other categories of entities not included within the current definition of SCI entity that, given their increasing size and importance, could pose risks to the market should an SCI event occur.” Specifically, in the adopting release the Commission listed some future candidates — non-ATS broker-dealers, security based swap dealers, investment advisers, investment companies and transfer agents — for the expanded scope. In fact, Commission Chair Mary Jo White has directed the Commission Staff to evaluate the prospect of implementing an “SCI-like framework to cover such key market participants.”