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The Journal on the Law of Investment & Risk Management Products

COVID-19 and business continuity: Not U.S. futures regulators' first disaster

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Home Perspectives COVID-19 and business continuity: Not U.S. futures regulators' first disaster
Even though the severity of business and social disruption caused by the COVID-19 pandemic1 is unprecedented, the occurrence of disruption itself is not entirely unexpected. These events (i.e., disruptions) continue to happen with increasing frequency and severity, making it a near certainty that disruptive events will happen again in the future, and industry participants should expect the unexpected.2 In response to the recurring disruptions over the past two decades, U.S. and global regulators have made several recommendations and promulgated regulatory and compliance obligations that require market participants to design and implement business continuity and disaster recovery (BCDR) plans, as well as corresponding policies and procedures.

The COVID-19 pandemic, of course, stands out from previous disruptions in both its severity and scope of global impact.3 The purpose of this paper is to analyze specific actions taken by U.S. derivative regulators in response to the COVID-19 pandemic and how businesses and regulators responded to this unprecedented challenge within the framework of already established BCDR guidelines. The author concludes the paper with several suggestions as to how existing BCDR requirements should be updated, promulgated, or revised with a focus on the jurisdictional scope of the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA).4 As suggested in this paper, BCDR preparedness needs to apply equally to those regulated by the CFTC and the NFA (and by other self-regulatory organizations (SROs)), as well as the regulators themselves-i.e., the CFTC, the NFA and the SROs.

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