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Settlement & Operations by Loffa Interactive Group

When Staff Can't Reach the Office Near a T+1 Deadline: FINRA Rule 4370 and Remote Work

An aerial view of a city at dusk where a main avenue sits dark and gold traffic trails flow around it through side streets.

Updated October 2026. First published May 2024, the morning after a rail outage at New York Penn Station.

On the evening of May 22, 2024, downed overhead wires near Kearny, New Jersey, stopped Amtrak and NJ Transit trains into and out of New York Penn Station for close to five hours, NBC News reported. T+1 took effect six days later. We wrote the first version of this post the next morning.

The timing is why the event is worth coming back to. Service stopped in the evening rush, and NJ Transit suspended trains at about 6:15 p.m. Under T+1, that's the middle of the busiest stretch of the settlement day. In 2025, 69.6% of U.S. allocations sent to DTCC's CTM matching service arrived between 4 p.m. and 7 p.m. ET, according to DTCC's annual report to the SEC, and DTC's affirmation cutoff is 9 p.m. Under T+2, work left undone at 6 p.m. could wait for the morning. Under T+1, the deadline is three hours away.

A hypothetical shows the gap. An operations analyst leaves the office at 5:15 p.m. to finish the day's affirmations from home and spends the next four hours on a stopped train with no connection. Nobody else knows which trades were still open. A plan written for a 9 a.m. building outage won't cover that.

What FINRA Rule 4370 Requires

FINRA Rule 4370 requires every member to create and maintain a written business continuity plan for emergencies and significant business disruptions. The plan must be reasonably designed to let the firm meet its existing obligations to customers, and it must address the firm's relationships with other broker-dealers and counterparties. A member of senior management who is a registered principal approves it. The firm reviews it every year and updates it after any material change.

The plan has to address ten elements, scaled to the firm's size and business. For a settlement deadline, four matter most:

  • all mission critical systems;
  • alternate communications between the firm and its employees;
  • the alternate physical location of employees;
  • the impact on critical business constituents, banks, and counterparties.

A firm can leave out an element that doesn't apply, but the plan has to say why. If the firm relies on another company for an element or a mission critical system, the plan has to address that relationship as well.

Home Is Now the Alternate Location

For most firms in 2026, the alternate physical location is employees' homes, and the rules for that changed the same week T+1 started. FINRA's COVID-era relief under Regulatory Notice 20-08 ended on May 31, 2024. On June 1, 2024, Rule 3110.19 took effect. It lets a firm treat a private residence where an associated person does specified supervisory work as a non-branch location, inspected on a periodic schedule presumed to be at least every three years, if the firm meets the conditions and documents a risk assessment. On July 1, 2024, a voluntary three-year pilot under Rule 3110.18 began letting participating firms inspect offices remotely.

Those rules settle where supervision can happen. Whether your evening settlement work can run from those homes is a separate question, and the continuity plan is where you answer it.

Test the Plan at 5:30 p.m.

Most continuity tests run in business hours. Try one on a trade date at 5:30 p.m. ET and check these:

  • Can the people who do allocations, affirmations, and Letter of Free Funds responses do them from home, on firm devices, with the same access and multi-factor authentication they use in the office?
  • Can a principal approve exceptions remotely after 6 p.m., and do your written supervisory procedures say so?
  • Do remote staff use only channels the firm captures? A text to a counterparty from a personal phone during an outage is still a business communication the firm has to keep under SEC Rule 17a-4.
  • Is there a shared list of open trades, so the work doesn't stop when one person goes offline?
  • Who calls the clearing firm or the counterparty when a deadline will be missed, and is that number written in the plan or saved only in someone's phone?
  • Does the plan name the vendors whose systems the evening work depends on, as Rule 4370(c) expects when you rely on another company?

Rule 4370 also requires two emergency contact persons on file with FINRA, at least one of them a member of senior management and a registered principal. Check that both can be reached at 8 p.m. on a weekday.

The open-trades question is also a people question. If one analyst is the only person who knows the evening queue, the outage only exposes a key-person risk you already had. For a larger disruption and what it taught about continuity, see our post on the Francis Scott Key Bridge collapse.

This post is for informational purposes only and does not constitute legal advice. For guidance on specific regulatory obligations, consult your counsel or compliance advisor.

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