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By Chris Whitside

Maysar Al-Samadi, vice president of professional standards at the IDA, is feeling the pressure of a looming deadline as much or more than the members of his organization. He and the IDA's Contingency Planning sub-committee have been pivotal members in a year-long education and communication program to ensure that all IDA members have business continuity plans (BCPs) by July 31, 2006. IDA by-law 17.19 requires IDA members to develop BCPs for maintaining service continuity in the face of significant business disruptions. Since there are external dependencies in every company's operations, there is also a requirement that members have comfort letters with respect to their service providers' BCPs. On behalf of its members, the IDA requested comfort letters from all major service providers in the Canadian investment fund industry, among them CDS, CDCC, TSX, Bourse de Montreal, IBM, ADP and, of course, FundSERV.

"We made it clear to members, right up front, that developing BCPs is not going to be easy or free of cost," says Al-Samadi. "Members can limit some of the burden of business continuity planning, though, if they keep in mind that the IDA requirements are limited to enabling client access to their assets within 48 hours following a significant business disruption. Such minimum requirements can be less than normal business continuity expectations. The particular plans we require are not for business survivability; that's up to individual companies. Our purpose is to simply assure investors that, in the face of any calamity, IDA member companies will stay in business long enough to ensure client access to their assets and to markets to monetize them."

Although there was considerable discussion for many years, Al-Samadi notes that 9-11, the power outage of August 2003 and a number of weather-related calamities provided the impetus for this initiative. When IDA by-law 17.19 was passed, members were promised 12 months to prepare. Since then, the IDA has been busy presenting education programs with help from SunGard and Telus, and creating a special Web site to help members meet the requirements. All plans (other than those of introducing members) must be approved by independent third party reviewers and accordingly, the IDA established qualifications guidelines for reviewers and a standard review report.

"FundSERV readiness is disclosed to all customers via our Report on Internal Control Procedures," notes FundSERV president, Alan Hutton. "With our new second site and well-audited business continuity and disaster recovery plans, we have assured the IDA that FundSERV is among the strongest links in the industry's chain of connectivity. We are confident that FundSERV will be available to customers in any disaster, and pleased that the IDA is taking this initiative to ensure our customers' connectivity from their side."

Following the July 31, 2006 deadline, IDA members will be required to maintain their business continuity plans and update them on a regular basis. All plans must be tested, updated and approved annually by company management. Companies must also assign an executive to take ownership of their business continuity program and submit plans for independent review every three years (earlier if there is a fundamental change in business). For its part, the IDA has created its own BCP and a virtual crisis communication centre (CCC). The CCC will act as an information hub for collecting and disseminating information to members in case of a significant business disruption. Contributors to the CCC include the Securities Commissions, the Exchange Markets, the Clearing Corporations, CIPF, FundSERV, the Bank of Canada, and the Department of Finance in addition to IDA member firms. A CCC core group (or a crisis management group) comprised of representatives of member firms and IDA staff will decide when to invoke the CCC. The CCC will utilize a members only Web site for the dissemination of information. The IDA is also considering industry-wide, business continuity tests. These mock scenarios will be similar to US practice and will ensure that the Canadian investment dealer industry is ready to deal with major disruptions.

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