Security and Securities

Post-9/11, financial security has a whole new meaning

Jonathan Rauch | August 4, 2004

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"Before 9/11," says Paretti, "this room was full, because we had all the bodies here." Where are they now? He points to a large-screen TV. It shows video feeds from three command centers. One is where we're standing. The others are -- well, somewhere. DTCC now runs several remote command centers, all of them in secret locations, some more than 1,000 miles away, and each fully staffed and capable of running the whole settlement system. Any center can independently take control if others cease to respond.

On 9/11, transaction data that poured into the Manhattan office were backed up, but the backup site was nearby. Thanks to a new technology that was invented for the purpose, data are now backed up to faraway locations at intervals of 15 minutes or less. If the whole New York region were annihilated, only a few minutes' worth of trades would be lost, a nuisance rather than a calamity.

Personnel, too, are backed up and disaggregated. Rotations ensure that essential officers are never all at headquarters simultaneously. "Desktop drills" regularly pretend that New York has disappeared and check on the whereabouts of backup teams. Staff members carry multiple communications links, all running on different networks. Communications with financial institutions, a trouble spot on 9/11 when some key telephone exchanges went down, now take place over a redundant system that is designed to reroute communications around even a large infrastructure failure.

"It's been an entire culture change," Considine says. Throughout the company, systems that for decades relied on central control are being reorganized for independent movement and judgment. Hubs are giving way to networks. It is not just terrorists who are adopting cell structures.

"Let me tell you, it's expensive," Considine says. "Instead of running one, you're running two. Instead of running two, you're running three." DTCC's disaster-proofing costs so far have run to something like $150 million. Donald F. Donahue, the company's chief operating officer, was recently appointed by the Treasury Department to coordinate the financial sector's infrastructure-protection efforts. "The security of the sector compared to two and a half years ago is orders of magnitude better," he says. But there is still much work to do, for instance in closing communications and software vulnerabilities. "Nobody's relaxed about this," he says.

Meanwhile, in the time it took you to read this article, millions of financial transactions clicked through computers in New York and then were copied to computers far away. Don't ask where.