The Securities and Exchange Commission (SEC) has proposed some guidelines that will allow capital market operators and investors to digitize all of their processes.
The requirements are contained in the Minimum Operating Standards for Information Technology for capital market operators recently exposed to the public, released by the SEC.
The commission argued that rules establishing basic market operating criteria were essential due to the increasing reliance of financial services and related companies on technology.
What the SEC is saying
SEC said the guidelines would establish a threshold for operational efficiency in the market through effective adoption of Information Technology (IT) in driving businesses to ensure security, confidentiality, integrity and reliability of information systems.
The SEC said, ”This will help operators harness the huge benefits derivable from the adoption of technology and also manage the attendant cyber-security threats and other risks that accompany the use of technology.”
”It will also positively impact on the effectiveness and efficiency of the Commission to monitor and regulate all capital market operators in the market,” the SEC added.
The Commission stated that the document’s requirements would apply to all types of CMOs, else in places where specific kinds of operators were mentioned.
Key takeaway from the SEC guideline
- Any or a mix of Client-Server, Cloud, Distributed, or Time-Sharing computing environments may be used. The computing environment must be well-suited to the Capital Market Operator’s activities and business objectives (CMO).
- To ensure service availability and continuity, hardware systems and all other IT equipment in the environment must be housed in physical premises with proper security, access control, power, and cooling.
- The servers must run Microsoft Windows Server 2016 or an equivalent UNIX/Linux and comparable server operating system. All operating system versions in use must be licensed, activated, and fully supported by OEMs in terms of receiving security updates and patches on a regular basis.
- All installed software applications must be licensed and compatible with these operating system minimum versions. The server hardware must meet the minimum requirements for installing Microsoft Windows Server 2016 or equivalent UNIX/Linux and related server operating systems.
- All IT/IS functions must be staffed by skilled and competent individuals who have verified certification, suitable education, or relevant experience. IT/IS management function handlers must have a minimum of a BSc/HND or the equivalent. IT/IS personnel must be sufficiently trained to keep up with the fast-paced changes and evolutions that characterize the technology industry.
- All exchanges must offer secure trading platforms that incorporate real-time quotations, charting tools, news feeds, deal monitoring, and premium research, among other features. All exchanges must have a surveillance system that monitors all trade operations in real time.