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Law360 (March 23, 2020, 7:40 PM EDT) -- Wall Street's top trade group is urging state governors across the country to follow New York and California's lead in labeling financial service firms "essential" so they are spared from mandatory closure amid the coronavirus pandemic.
Kenneth E. Bentsen Jr., president of the Securities Industry and Financial Markets Association, penned a letter to the National Governors Association on Friday imploring them not to order financial service companies closed as part of any statewide "stay-at-home" measures to combat the spread of COVID-19.
"It is imperative that financial services firms and personnel that are critical to maintaining financial market operations and that service institutional and/or retail clients be deemed essential — especially during a time when access to people's savings and investments are so important," Bentsen wrote to the NGA.
The NGA's vice chair, Gov. Andrew Cuomo, has already exempted banks and other financial firms from his order for New Yorkers to stay home as much as possible and nonessential businesses to close, echoing a "shelter-in-place" order made by Gov. Gavin Newsom in California on Thursday.
Governors in several other states, including New Jersey and Illinois, followed suit over the weekend with shutdown directives adhering to SIFMA's pleas for them to recognize financial services firms as essential businesses and "that some financial services workers must be onsite to ensure the functioning of — and customer access to — the financial markets."
Bentsen's letter, which praised the orders in New York and California, noted most players in the financial sector have already implemented work-from-home options in their business continuity plans, but that critical personnel at banks, brokerages and exchanges need to keep working at their offices.
While it has fallen on states to order closures and "shelter-in-place" directives, the U.S. Department of Homeland Security has designated the financial services sector as "critical infrastructure," meaning its disruption would have "a debilitating effect on security, national economic security, national public health and safety, or any combination thereof."
SIFMA says this classification is instructive and further urged state governors to reconsider limitations on mass transportation in major metropolitan areas that could make it difficult for individuals "who open markets every morning and maintain orderly operations" to make it to their offices.
"Any discontinuation of mass transportation would prevent the markets from opening and cause significant harm to the economy and may cause a crisis of public confidence in our financial system," Bentsen said.
The letter came on the same day that SIFMA put out a joint statement with the U.S. Chamber of Commerce and a variety of other Wall Street groups on the importance of keeping U.S. financial markets open and functioning even as the coronavirus spread roils the global economy, strains health care systems and warps daily life.
"Keeping all U.S. financial markets open is essential to the well-being of the general economy and vital to maintaining and bolstering investor confidence, particularly once the economy recovers from effects of this pandemic," the statement said.
The U.S. Securities and Exchange Commission took a similar stance last week when it announced its staff largely transitioned to a "full telework posture" but was working in close coordination with other financial regulators and exchanges to keep financial markets operating.
The regulator took steps over the weekend to ensure that the New York Stock Exchange could close its New York trading floor on Monday and move to full electronic trading for the first time ever. Nasdaq took similar measures last week while closing its options trading floor in Philadelphia.
"The SEC has been in close contact with exchanges and other market participants as they implement business continuity measures in response to COVID-19," said Brett Redfearn, director of the SEC's Trading and Markets Division, in an announcement on Saturday. "The division is prepared to act quickly to facilitate the implementation of these measures to support orderly trading on our nation's securities markets and to help ensure the health and safety of all market participants."
--Editing by Amy Rowe.
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