Resilience in Investment Firms

Resilience in an investment firm is about a client being able to trade, to see an accurate position, and to be confident that client money and assets are safe, even when a market, a venue, or a broker is disrupted. The central services are receiving and executing orders, holding and reporting client positions, safeguarding client money and assets, and reporting to clients and regulators. When those services stop, the harm is acute because markets do not pause. A client who cannot sell during a sharp fall is exposed to a loss that grows while the service is down. A client who cannot see a true position cannot judge risk. A client whose order is stuck in an unknown state, executed or not, faces uncertainty that is itself a harm.

Order execution is the service clients judge first. An order passes from a client channel through order management and routing to a venue, broker, or market maker, and then back as an execution report. Each stage can fail independently: the client channel might fail while venues are open, routing might fail while the channel works, or a venue might halt while routing works. The service description has to trace those stages, because the recovery for each is different, and the message to clients depends on which stage failed. A client told that markets are down, when in fact only the firm's channel is down, will misunderstand the position entirely.

Retail clients are harmed by being unable to act in moving markets, and by uncertainty about orders already placed. A retail investor who placed an order before an outage, and cannot learn whether it executed, may place a duplicate order, or may refrain from acting when action is needed. Either response can create loss. Professional clients face a parallel harm at larger scale: a portfolio manager who cannot trade cannot manage risk, and a firm that cannot report positions cannot meet its own obligations to its clients. The harm is therefore both individual and institutional, and it spreads through portfolios that depend on the firm's execution.

Investment firms depend on exchanges and other venues, on brokers and clearing firms, on market data providers, and on the technology that routes and reports orders. A venue halt is a dependency failure the firm cannot fix, and its resilience lies in what it does while the venue is halted: routing to alternatives where possible, holding orders safely where not, and communicating the position clearly. A market data outage is subtler, because trading without reliable prices risks executing at wrong prices, and the firm may need to pause or restrict trading rather than continue blind. The plan should state those decision points in advance, so they are not improvised under pressure.

A useful investment firm test follows orders through a venue disruption. One example is a venue halt during volatile trading: can orders be held safely, can clients be told which orders are held and which are cancelled, and can trading resume without duplicate orders when the venue returns? Another is a market data outage: does the firm pause or restrict trading, and how is that decision communicated? A third is an order management failure: can the firm reconstruct order state from venue and broker records, and can every client be given a definitive outcome for every order placed during the outage?

Check whether the plan traces orders stage by stage, and whether it states what happens to orders in doubt during each plausible disruption. Check whether position accuracy and client money reconciliation are recovery milestones, with named owners. Check whether the plan covers venue halts and market data outages as distinct scenarios, with different responses. And check which regime is being applied: DORA, which applies from 17 January 2025, and the UK regime under FCA PS21/3 and PRA PS6/21 are labelled separately in this guide.