nybot

Issue #44

Last Update March 2, 2006

Technology Disaster Recovery Revisited by David Katz Three years ago, in the wake of 9/11, New York Stringer Magazine carried an article entitled “Disaster Recovery Done Right” which described the New York Board of Trade’s disaster recovery process that allowed the commodity exchanges under NYBOT’s umbrella to resume operation within a week after the total destruction of its facilities at 4 World Trade Center. The planning that made this possible was done by a team lead by NYBOT’s CIO, Steve Bass.

The critical item that lead to success was the realization that merely providing a computer backup facility was not enough; a disaster great enough to take out NYBOT’s technology infrastructure was also likely to make the trading floors of the Cotton Exchange and the Coffee Cocoa and Sugar Exchange (NYBOT’s constituent operations) unavailable. The backup facility created in Long Island City provided for a small exchange floor in addition to a secondary computer installation. The Long Island City setup worked well; despite limited trading hours and communications problems on the part of the exchange membership, record trading volumes were achieved.

In the intervening three years, what has been done to strengthen NYBOT’s disaster readiness? With the destruction of 4 World Trade Center, the backup site became the only site. A new backup site was required to protect NYBOT in the event that the LIC location was compromised. In the first year after 9/11, the LIC facility was expanded to increase trading capacity, and a new site was acquired on lower Broadway; this served as a recovery site for LIC, and marked the beginning of NYBOT’s reentry into Manhattan. Then, NYBOT moved into the building in the World Financial Center owned by the New York Mercantile Exchange, just a few blocks from the original World Trade Center location, allowing the Long Island City facility to revert to backup status, and providing NYBOT with additional protection. The Broadway remains as the IT headquarters.

Steve Bass is the President of the Futures Industry Association’s IT Division, and is leading industry-wide effort to coordinate disaster recovery plans and ensure that the commodities industry as a whole is able to survive a major disruption. Until now, each exchange and brokerage firm has been responsible for its own plan development, and testing of these plans has often involved only the one firm or exchange. In conjunction with the FIA's Service Division, which focuses on brokers, the IT Division, focusing on the exchanges, has been spearheading the development of industry-wide disaster-plan testing and the linking of backup site to backup site. The first industry-wide plan test is scheduled for October 9 of this year. As Steve Bass says, “The results of this first test are less important than the fact that the test is being held.” No one expects perfection at this stage; the purpose of the industry-wide test is to find the disconnects and improve everyone's planning.

Most crises are not as extensive and all-encompassing as 9/11. Most last for hours, days, or a week at most. For cornerstone industries such as the financial industry, transportation, power, health care and water supply, preparedness protects us all. Preparing for the once in a century disaster makes coping with normal problems of fire, flood, severe weather, strikes and even terrorism more effective. NYBOT has been at the forefront of this effort.