Business Continuity Plan
November 2013
Table of Contents
- Emergency Contact Persons
- Firm Policy
- Significant Business Disruptions (SBDs)
- Approval and Execution Authority
- Plan Location and Access
- Business Description
- Office Locations
- Office Location #1
- Office Location #2
- Alternative Physical Location(s) of Employees
- Customers' Access to Funds and Securities
- Data Back-Up and Recovery (Hard Copy and Electronic)
- Financial and Operational Assessments
- Operational Risk
- Financial and Credit Risk
- Mission Critical Systems
- Our Firm's Mission Critical Systems
- Order Taking
- Order Entry
- Order Execution
- Other Services Currently Provided to Customers
- Mission Critical Systems Provided by Our Clearing Firm
- Alternate Communications Between the Firm and Customers, Employees, and Regulators
- Critical Business Constituents, Banks, and Counter-Parties
- Business constituents
- Banks
- Counter-Parties
- Regulatory Reporting
- Disclosure of Business Continuity Plan
- Updates and Annual Review
- Senior Manager Approval
- Attachment A to CGIS Securities LLC Business Continuity Plan
- CGIS Securities LLC's Business Continuity Planning
Introduction:
CGIS Securities LLC (“CGIS” or “Firm”) is committed to complying with FINRA Rule 4370 and the provisions outlined in the NASD Notice to Members 04-37 in order to provide procedures for business continuity. The following section outlines the Firm’s procedures for complying with the provisions of these rules. .
I. Emergency Contact Persons
The Firm has designated the following two emergency contacts persons:
Rigoberto Dapena, Chief Executive Officer ("CEO")
Cell Phone: (305) 318-6436
Email Address: rdapena@cgissecurities.com
Darius Lashkari, Chief Compliance Officer ("CCO")
Cell Phone: (954) 394-8359
Email Address: dlashkari@cgissecurities.com
.The Firm will provide FINRA with the contact information for the two emergency contact persons: (1) name; (2) title; (3) mailing address; (4) email address; (5) telephone number; and (6) facsimile number through the FINRA Contact System (FCS). Mr. Lashkari will promptly notify FINRA of any change in this information through FCS (but no later than 30 days following the change) and will review, and if necessary update, this information within 17 business days after the end of each calendar year
Rule: FINRA Rule 4370(f); NASD Rule 1160.
II. Firm Policy
Our Firm’s policy is to respond to a Significant Business Disruption (SBD) by safeguarding employees’ lives and Firm property, making a financial and operational assessment, quickly recovering and resuming operations, protecting all of the Firm’s books and records, and allowing our customers to transact business. In the event that we determine we are unable to continue our business, we will assure customers prompt access to their funds and securities through our clearing firm.
A. Significant Business Disruptions (SBDs)
Our plan anticipates two kinds of SBDs, internal and external. Internal SBDs affect only our Firm’s ability to communicate and do business, such as a fire in our building. External SBDs prevent the operation of the securities markets or a number of firms, such as a terrorist attack, a city flood, or a wide-scale, regional disruption. Our response to an external SBD relies more heavily on other organizations and systems, especially on the capabilities of our clearing firm.
B. Approval and Execution Authority
Mr. Lashkari, CCO, a registered principal, is responsible for approving the plan and for conducting the required annual review. Mr. Lashkari and Mr. Dapena have the authority to execute this BCP.
C. Plan Location and Access
Our Firm will maintain copies of its BCP plan and the annual reviews, and the changes that have been made to it for inspection. An electronic copy of our plan is located on our internal server.
Rule: FINRA Rule 4370(b), (d) and (e).
III. Business Description
CGIS will conduct business in equity securities; options; mutual funds; corporate debt securities; government securities; municipal; private placements; and structured products. The Firm will trade fixed income securities including US corporate debt, US government securities, foreign corporate debt, and sovereign debt with a concentration in emerging markets for its own account. Additionally, CGIS may act as a selling group member in best efforts underwritings of foreign corporate debt securities.
The Firm will introduce accounts to Pershing LLC ("Pershing" or "clearing firm").
IV. Office Locations
CGIS maintains the following locations
A. Office Location #1
Our main office of supervisory jurisdiction ("OSJ") is located at:
990 Biscayne Boulevard
Suite 0-901
Miami, FL 33131
Phone Number 954-394-8359 and 305-318-6436
Employees may travel to this location by foot, car, subway, train, bus.
B. Office Location #2
The Firm maintains the following non-OSJ branch office:
TBD
V. Alternative Physical Location(s) of Employees
In the event of an SBD, we will move our staff from affected office(s) to the home address of the CCO:
The address and phone number of that location is:
7445 North West 44th Street
Apt 1111
Lauderhill, FL 33319
(954) 394-8359
Rule: FINRA Rule 4370(c)(6).
VI. Customers' Access to Funds and Securities
CGIS does not maintain custody of customers’ funds or securities; all customer funds and securities are maintained by Pershing. In the event of an internal or external SBD, if telephone service is available, our registered persons will take customer orders or instructions and contact our clearing firm on their behalf, and if our Web access is available, our Firm will post on our website that customers may access their funds and securities by contacting Pershing’s customer service at (201) 413-3635 or in writing to the address below:
Pershing LLC
P.O. Box 2065
Jersey City, New Jersey 07303-2065
The Firm will make this information available to customers through its disclosure policy.
If SIPC determines that we are unable to meet our obligations to our customers or if our liabilities exceed our assets in violation of Securities Exchange Act Rule 15c3-1, SIPC may seek to appoint a trustee to disburse our assets to customers. We will assist SIPC and the trustee by providing our books and records identifying customer accounts subject to SIPC regulation.
Rules: FINRA Rule 4370(a); Securities Exchange Act Rule 15c3-1; see also 15 U.S.C. § 78eee.
VII. Data Back-Up and Recovery (Hard Copy and Electronic)
CGIS maintains its primary hard copy books and records and its electronic records at the OSJ branch office. The CCO is responsible for the maintenance of these books and records.
Our Firm also maintains its back-up hard copy books in electronic records as well and it is maintained in the firm’s shared drive which is backed up daily by an independent data back-up provider.
In the event of an internal or external SBD that causes the loss of our paper records, we will physically recover them from our back-up site. If our primary site is inoperable, we will continue operations from our back-up site or an alternate location. For the loss of electronic records, we will either physically recover the storage media or electronically recover data from our back-up site, or, if our primary site is inoperable, continue operations from our back-up site or an alternate location.
Rule: FINRA Rule 4370(c)(1).
VIII. Financial and Operational Assessments
A. Operational Risk
In the event of an SBD, we will immediately identify what means will permit us to communicate with our customers, employees, critical business constituents, critical banks, critical counter-parties and regulators. Although the effects of an SBD will determine the means of alternative communication, the communications options we will employ will include our website, email, telephone, and regular mail. In addition, we will retrieve our key activity records as described in the section above, Data Back-Up and Recovery (Hard Copy and Electronic).
Rules: FINRA Rules 4370(c)(3),(c)(4), (c)(5), (c)(7), (c)(9 & (g)(2)).
B. Financial and Credit Risk
In the event of an SBD, we will determine the value and liquidity of our investments and other assets to evaluate our ability to continue to fund our operations and remain in capital compliance. We will contact our clearing firm, critical banks and investors to apprise them of our financial status. If we determine that we may be unable to meet our obligations to those counter-parties or otherwise continue to fund our operations, we will request additional financing from our bank or other credit sources to fulfill our obligations to our customers and clients. If we cannot remedy a capital deficiency, we will file appropriate notices with our regulators and immediately take appropriate steps.
Rules: FINRA Rules 4370(c)(3), (c)(8) & (g)(2).
IX. Mission Critical Systems
Our Firm’s “mission critical systems” are those that ensure prompt and accurate processing of securities transactions, including order taking, entry, execution, comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts and the delivery of funds and securities.. More specifically, these systems include:
- Email (hosted by Smarsh)
- Bloomberg Messenger
- Dedicate Link of an Internet Provider
- Private Branch Exchange (PBX) (i.e. Phone communication platform)
- NetX360Order Management and transmittal
We have primary responsibility for establishing and maintaining our business relationships with our customers and have sole responsibility for our mission critical functions of order taking, entry, and execution. Pershing provides, through contract, the comparison, allocation, clearance and settlement of securities transactions, maintenance of customer accounts, access to customer accounts and the delivery of funds and securities.
Our clearing firm contract provides that our clearing firm will maintain a business continuity plan and the capacity to execute that plan. Pershing represents that it will advise us of any material changes to its plan that might affect our ability to maintain our business. In the event our clearing firm executes its plan, it represents that it will notify us of such execution and provide us equal access to services as its other customers. If we reasonably determine that our clearing firm has not or cannot put its plan in place quickly enough to meet our needs, or is otherwise unable to provide access to such services, our clearing firm represents that it will assist us in seeking services from an alternative source.
Our clearing firm represents that it backs up our records at a remote site. Our clearing firm represents that it operates a back-up operating facility in a geographically separate area with the capability to conduct the same volume of business as its primary site. Our clearing firm has also confirmed the effectiveness of its back-up arrangements to recover from a wide scale disruption by testing on a regular basis.
Recovery-time objectives provide concrete goals to plan for and test against. They are not, however, hard and fast deadlines that must be met in every emergency situation, and various external factors surrounding a disruption, such as time of day, scope of disruption and status of critical infrastructure—particularly telecommunications—can affect actual recovery times. Recovery refers to the restoration of clearing and settlement activities after a wide-scale disruption; resumption refers to the capacity to accept and process new transactions and payments after a wide-scale disruption. Our clearing firm has the following SBD recovery time and resumption objectives: recovery time period of 4 hours, depending on the availability of external resources; and resumption time of within the same business day.
Mr. Lashkari will periodically review our clearing firm's capabilities to perform the mission critical functions the clearing firm has contracted to perform for our Firm.
A. Our Firm's Mission Critical Systems
1. Order Taking
Currently, our Firm receives orders from customers via telephone, email, and instant messenger. During an SBD, either internal or external, we will continue to take orders through any of these methods that are available and reliable, and in addition, as communications permit, we will inform our customers when communications become available to tell them what alternatives they have to send their orders to us. Customers will be informed of alternatives by whatever means are available given the circumstance. If necessary, we will advise our customers to place orders directly with our clearing firm.
2. Order Entry
Currently, our Firm enters orders by recording them on paper and electronically and sending them to our clearing firm electronically through its trading platform, NetX360 Order Management or telephonically. We have contacted Pershing and were told that, under its BCP, we can expect order entry services to resume within 4 hours, depending on availability of external resources.
In the event of an internal SBD, we will enter and send records to our clearing firm by the fastest alternative means available. In the event of an external SBD, we will maintain the order in electronic or paper format, and deliver the order to the clearing firm by the fastest means available when it resumes operations. In addition, during an internal SBD, we may need to refer our customers to deal directly with our clearing firm for order entry.
3. Order Execution
We currently execute orders through our clearing firm. In the event of an internal or external SBD, we would execute orders through the fastest alternative means available.
B. Mission Critical Systems Provided by Our Clearing Firm
CGIS relies, by contract, on our clearing firm to provide order comparison, order allocation, customer account maintenance and/or access and delivery of funds and securities.
Rules: FINRA Rules 3510(c)(2) & (g)(1).
X. Alternate Communications Between the Firm and Customers, Employees, and Regulators
A. Customers
We now communicate with our customers using by the telephone, email, our website, fax, U.S. mail and in-person visits at our Firm or another location. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. For example, if we have communicated with a party by email but the Internet is unavailable, we will call them on the telephone and follow up where a record is needed with paper copy in the U.S. mail.
Rule: FINRA Rule 4370(c)(4).
B. Employees
We now communicate with our employees via telephone, email, and in person. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. We will also employ a call tree so that senior management can reach all employees quickly during an SBD. The call tree includes all staff home and office phone numbers. We have identified persons, noted below, who live near each other and may reach each other in person:
The person to invoke use of the call tree is Rigoberto Dapena. Employees will receive a call tree at the time of hire and whenever a change is made to the document. The Firm maintains a call tree separate from this document.
Rule: FINRA Rule 4370(c)(5).
C. Regulators
We are currently members of the following self-regulatory organizations (SROs), and are also regulated by the Financial Industry Regulatory Authority Inc. (“FINRA”), the Securities Exchange Commission (“SEC”), the Municipal Securities Rulemaking Board (“MSRB”), and the state of Florida. We communicate with our regulators by telephone, email, fax, and U.S. mail. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party.
Rule: FINRA Rule 4370(c)(9).
XI. Critical Business Constituents, Banks, and Counter-Parties
A. Business constituents
We have contacted our critical business constituents (businesses with which we have an ongoing commercial relationship in support of our operating activities, such as vendors providing us critical services), and determined the extent to which we can continue our business relationship with them in light of the internal or external SBD. We will quickly establish alternative arrangements if a business constituent can no longer provide the needed goods or services when we need them because of a SBD to them or our Firm. Our major suppliers are:
| Name | Service Provided |
|---|---|
| Private Branch Exchange | Communications |
| Smarsh | Message Archiving |
| Rothstein Kass | Audit |
| Apollo Bank | Capital and Operating Bank Account |
| S.D. Daniels and Co., P.C. | FinOP Support |
| SDDCO Regulatory Services LLC | Compliance Support |
Rules: FINRA Rule 4370(c)(7).
B. Banks
We have contacted our banks and lenders to determine if they can continue to provide the financing that we will need in light of the internal or external SBD. The Firm maintains its operating account with JP Morgan. The bank maintaining our Proprietary Account of Introducing Brokers/Dealers (PAIB account) is XXXX. If our banks and other lenders are unable to provide the financing, we will seek alternative financing immediately from our affiliates in Chile.
Rules: FINRA Rule 4370(c)(7).
C. Counter-Parties
We have contacted our critical counterparties, such as other broker-dealers or institutional customers, to determine if we will be able to carry out our transactions with them in light of the internal or external SBD. Where the transactions cannot be completed, we will work with our clearing firm or contact those counterparties directly to make alternative arrangements to complete those transactions as soon as possible.
Rules: FINRA Rule 4370(c)(7).
XII. Regulatory Reporting
Our Firm is subject to regulation by FINRA, the SEC, and the state of Florida. We now file reports with our regulators using paper copies in the U.S. mail, and electronically using fax, email and the Internet. In the event of an SBD, we will check with the SEC, FINRA and other regulators to determine which means of filing are still available to us, and use the means closest in speed and form (written or oral) to our previous filing method. In the event that we cannot contact our regulators, we will continue to file required reports using the communication means available to us.
Our core examiner is:
Examiner Name: Maite Lujan
2500 N. Military Trail, Suite 302
Boca Raton, FL 33431-6324
maite.lujan@finra.org
Phone number: 561-443-8084
Rule: FINRA Rule 4370(c)(8).
XIII. Disclosure of Business Continuity Plan
Attached is our written BCP disclosure statement we provide customers at account opening. We also provide it to customers upon request.
Rule: FINRA Rule 4370(e).
XIV. Updates and Annual Review
CGIS will update this plan whenever we have a material change to our operations, structure, business or location or to those of our clearing firm. In addition, our Firm will review this BCP annually to modify it for any changes in our operations, structure, business or location or those of our clearing firm.
Rule: FINRA Rule 4370(b).
XV. Senior Manager Approval
I have approved this Business Continuity Plan as reasonably designed to enable our Firm to meet its obligations to customers in the event of an SBD.
Rule: FINRA Rule 4370(d).
Signed: RIGOBERTO DAPENA
Title: CEO
Date: NOVEMBER 2013
Attachment A to CGIS Securities LLC Business Continuity Plan
CGIS Securities LLC's Business Continuity Planning
CGIS Securities LLC (“CGIS” or “Firm”) has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.
Contacting Us ΓÇô If after a significant business disruption you cannot contact us as you usually do, you should call our alternative number (954) 394 8359 or go to our website. If you cannot access us through either of those means, you should contact our clearing firm, Pershing LLC (“Pershing”), at (201) 413-3635 or www.pershing.com for instructions on how it may provide prompt access to funds and securities, enter orders and process other trade-related, cash and security transfer transactions for your customer.
Our Business Continuity Plan ΓÇô We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the Firm's books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our Firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.
Our business continuity plan addresses: data backup and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt access to their funds and securities if we are unable to continue our business.
Pershing backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by our clearing firm that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments within 4 hours, depending on the external resources available. Your orders and requests for funds and securities could be delayed during this period.
Varying Disruptions ΓÇô Significant business disruptions can vary in their scope, such as only our Firm, a single building housing our Firm, the business district where our Firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our Firm or a building housing our Firm, we will transfer our operations to a local site when needed and expect to recover and resume business within 24 hours. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and recover and resume business within 48 hours. In either situation, we plan to continue in business, transfer operations to our clearing firm if necessary, and notify you through our website or our customer emergency number, (954) 394-8359 how to contact us. If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customer's prompt access to their funds and securities through our clearing firm.
For more information ΓÇô If you have questions about our business continuity planning, you can contact our Chief Compliance Officer at dlashkari@cgissecurities.com.