WASHINGTON, Aug 31: As the first anniversary of the Sept. 11 attacks nears, US financial regulators on Friday said some firms should create disaster recovery plans with an eye toward potential region-wide disruptions.

In a draft “white paper,” the Federal Reserve Board, the Office of the Comptroller of the Currency, the Securities and Exchange Commission and the New York State Banking Department said they had been meeting with unspecified industry participants on the lessons from Sept. 11. They also said they discussed the need to strengthen “the overall resilience of the US financial system in the event of a wide-scale, regional disruption.

Comments on the paper are due by Oct. 21 and the agencies said they expect companies’ plans to be in place no later than six months after the regulators issue their final views.

The Sept. 11 attacks in New York crippled Wall Street, temporarily shutting down both stock and bond trading.

That experience has caused many firms to refocus on their disaster recovery plans and back-up systems. In the paper, the agencies said they would be closely scrutinizing organizations whose inability to recover or resume activities in “critical markets could pose a systemic risk to the financial system.

The paper defined the federal funds, foreign exchange and commercial paper markets, as well as the government corporate and mortgage-backed securities markets as critical.

The paper was less clear about firms that play significant roles in such markets.

The agencies believe that many if not most of the 15-20 major banks and the 5-10 major securities firms, and possibly others, play at least one significant role in at least one critical market, the paper said.

The paper suggested firms identify critical activities, decide on recovery objectives, maintain sufficient “out-of-region” resources to meet those objectives, and routinely test back-up arrangements.

The paper noted it was not advocating firms move their operations from city centers. There are many important business and internal control reasons for having processing sites near financial markets and firms’ headquarters. It is the separation between primary and alternative processing sites that is important in promoting resilience, the paper said.

In the wake of Sept. 11, some financial firms moved their operations in the southern tip of New York City across the river to northern New Jersey.

—Reuters