The Treasury Green Paper, The Financial System and Major Operational Disruption, highlights the possibility of IT problems such as a computer bug or virus incapacitating the Stock Exchange or other systems.
The document also talks of contingency plans for a September 11 style terrorist attack or severely adverse weather.
It says: ‘The documents core question is whether in principle, it would be useful to have a new legislation to help promote order in the financial system in the face of major operational disruption?’
The consultation paper says the main responsibility should lie with the private sector and ‘market based’ approaches.
It goes on to say: ‘To make potential new legislation workable, its powers would need to be exercised by secondary legislation or an administrative direction made in a flexible fashion during the disruption. Accountability would be important.
‘The two powers suggested are:
- a power to suspend certain financial obligations – provide a breathing space; and
- a power to direct financial “infrastructure” (such as exchanges, clearing houses, settlement systems and payment systems) – providing a means of interventions (but only in formal markets and systems at the heart of the financial system).
‘If major operation disruption occurred, use of such powers would by no means be automatic. The authorities would consider if there were particular circumstances that called for their use.
‘This consultation asks if the suspension and direction powers could be useful and for respondents views on whether they, or other powers, should be sought.’
Any such powers would be brought in through the proposed Civil Contingencies Bill.
The Green Paper highlights the disruption caused to US financial systems by the September 11 terror attacks on New York and Washington and on London by the 1987 hurricane as well as the potential chaos caused by an IT virus, bug or other electronic attack.
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