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US finance institutions have attack back-up plans

Traders on the floor of the New York Stock Exchange watch the early numbers.

Traders on the floor of the New York Stock Exchange watch the early numbers.

Ever since the attacks of September 11, major US financial institutions have spent a lot of time and money preparing for cataclysmic events, but it remains unclear how well the industry would cope if there were more attacks, a consultant said.

"It all depends on the size of the footprint of the event," said Joe Flach, vice-president of Eagle Rock Alliance Ltd, a consulting firm that has helped Wall Street companies plan for big disruptions.

The US financial system was given a grim reminder of its exposure on Sunday, when US Homeland Security Secretary Tom Ridge put New York, Washington and other financial centres on a high alert for attack.

The warning was unusually specific, citing buildings of the World Bank and International Monetary Fund in Washington, along with the New York Stock Exchange and financial services giant Citigroup Inc. in New York and insurer Prudential Financial Inc. in New Jersey as being at risk from truck bombs or suicide bombers.

"I think they (the financial community) are a little bit jittery," said Mr Flach. "But the jitters are more from a crisis response standpoint than from a continuity of business standpoint."

Business continuity - or back-up systems meant to ensure a smooth business environment - has long been a top concern. The Nasdaq stock market, for example, has data centers that are 300 miles apart and tests back-up diesel generators weekly.

Investment bank Lehman Brothers Holding Inc. still maintains a fully-equipped building in Jersey City, New Jersey that it used as a temporary headquarters after the attacks of September 11, 2001.

"The industry has been working closely with federal, state and local officials since September 11 to coordinate business continuity planning efforts," said Margaret Draper, a spokesman for the Securities Industry Association.

"The industry has significantly improved since September 11," Ms Draper said. "I don't think you can ever define where it needs to be."

Spokespersons at other Wall Street firms, such as Morgan Stanley, Merrill Lynch & Co. and J.P. Morgan Chase & Co. declined to comment on contingency plans.

In May, the Securities Industry Association and the Bond Market Association held an exercise involving 13 broker-dealers. During the drill, teams were presented with a scenario that included two hypothetical explosions in Manhattan.

"As an industry, the financial services community is far and away the best prepared to withstand business interruption events caused by terrorist attacks or any other kind of disaster than any other industry in corporate America," Mr Flach said. Since September 11, 2001 the NYSE has spent roughly $25 million on a back-up trading facility.

"The New York Stock Exchange will not be intimidated by terrorists," NYSE Chief Executive John Thain told reporters.

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