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 Documentation\Installation\Regulatory Compliance\NYSE
     
    The New York Stock Exchange
    The New York Stock Exchange has various regulations regarding the synchronization of clocks used for timestamping, particularly in regards to use of the Front End Systemic Capture (FESC) system.

      NYSE Rules 123 and, in particular, 132A detail these requirements. NYSE Information Memo 03-26, June 10, 2003 specifies:

      "New Rule 132A requires members to synchronize the business clocks used to record the date and time of any event that the Exchange requires to be recorded. The Exchange will require that the date and time of orders in Exchange-listed securities to be recorded. The Rule also requires that members maintain the synchronization of this equipment in conformity with procedures prescribed by the Exchange."
      Specific NYSE Time Synchronization Requirements
      Rule 132A contains two specific requirements:

      • Clocks Synchronized to Commonly Used Time Standard
        All computer clocks and mechanical timestamping devices must be synchronized to a commonly used time standard, either the National Institute of Standards and Technology (NIST) or United States Naval Observatory (USNO) atomic clocks.

      • Synchronization must be maintained
        Rule 132A also indicates that the member must ensure that their systems remain synchronized.

    How to Use Domain Time II to comply with the NYSE Rule 132A Requirements


    Domain Time II meets or exceeds all of the specific requirements detailed above. Properly configured, Domain Time will allow you to easily comply with all of the computer clock sychronization requirements.

      Domain Time II is designed specifically to provide both accurate time synchronization and a complete history of that synchronization. Each Domain Time II time sync component (Servers and Clients) have the ability to keep detailed logs and statistics of their own activity - and, critically, to report that information automatically to monitoring and auditing systems when requested.

      This diagram shows the basic structure of the Domain Time II system, showing how time synchronization and audit data collection are handled.

      The Domain Time II System

      Configuring for compliance
      These are the steps necessary to use Domain Time II to achieve compliance with NYSE Rule 132A:

      • Requirement: Clocks Synchronized to Commonly Used Time Standard
        Solution: Configure Domain Time II to provide accurate time sync to all clocks

        Domain Time II, when installed according to the instructions found on the Recommended Configurations page of the Domain Time II documentation, will meet the NYSE requirements for time synchronization. However, there are a few additional configuration considerations beyond the standard recommend installation instructions for NYSE compliance.

        Required Configuration Change

        Set the Domain Time II Master to use NIST or USNO as its time source:
        Use the Time Sources tab page of the Domain Time II Server Control Panel Applet to include the following entries in the Sources fields (in any order):
        • time.nist.gov
        • ntp2.usno.navy.mil

      • Requirement: Synchronization must be maintained
        Solution: Domain Time II does this automatically. Optional: Use Domain Time II monitoring and logging to verify synchronization

        Domain Time II is a robust and reliable time distribution system. It automatically maintains synchronization to time sources with no user intervention required. In addition, it has multiple methods for administrators to verify that synchronization is occuring. No additional configuration is required to meet this requirement. However, the Optional Steps detailed below

        Optional Steps
        Although current regulations do not overtly require records be kept of time synchronization, several planning and Information Memos imply that compliance with the time sync regulations may need to be demonstrated. Also, the SEC currently has regulations regarding the maintenance of specific types of records, including time synchronization logs, and the NASD OATS requirements (to which Rule 132A specifically refers) already require such record retention. It is reasonable to assume that NYSE will also do so in the near future.

        Domain Time II has exceptional built-in functionality to easily provide an audit trail of time synchronization.

        How to Configure Domain Time II to collect and maintain sync records in an audit trail


        The information below is based on meeting regulatory requirements, but gives a good overview of how Domain Time II can assist in creating and maintaining an audit trail of time synchronization.

        • Requirement: Documentation of clock synchronization procedures
          Solution: Use Domain Time II documentation as necessary to write your procedures.

            Domain Time II is thoroughly documented, and the behavior of the Domain Time II system and each time component and how it synchronizes is detailed in the Technical Information and Configuration and sections of the online documentation. These documents can be used to provide any level of detail of the system operation for compiling your documented procedures.

        • Requirement: Keep Logs of every time a clock is synchronized and the results of that synchronization
          Solution: Use Domain Time II Audit Server to collect sync logs.

            See the Audit Server documentation for details on configuring and using Audit Server.

            Domain Time II Audit Server is capable of collecting a log of time sync activity from Domain Time II components into a central location for easy analysis and archiving. Information retreived includes when a sync occurred and with whom the component synced, and amount the clock was corrected. Log retention is configurable to match archival schedules.

            Audit Server also keeps an audit record which can be used to demontrate on-demand that any particular machine was synchronized, with what source, and with what accuracy.

            Domain Time II Server and Full Client also keep a local log that includes not only time sync events, but all other events activity and events by the component. These logs can be manually collected and archived to meet the log retention requirements, however doing so is typically much more complex than using Audit Server to do so, and results in significantly larger log files to be archived. In most cases, using Audit Server to collect sync logs is optimal.

            Required Configuration Changes to Audit Server

            See Discovery documentation for details on these steps.

          • Add all broadcast subnets: If you want Audit Server to use broadcasts to discover machines to audit, enter the broadcast addresses for all subnets on your network where Domain Time II components are deployed to the Broadcast Addresses section of the Advanced tab page.

          • Collect Machine Lists from all Domain Time II Servers:
            If you want to automatically contact all machines that synchronize with Domain Time II Server, enable the and enter all Domain Time II Servers to be contacted to the Servers... dialog.

          • Manually Enter Other Machines:
            Use the Audit Server Audit List tab to manually enter any machines not automatically discovered by the methods above.

          • Enable Central Log Collection:
            Use the Discovery tab page of Domain Time II Audit Server to collect Time Synchronzation logs. Choose retention settings that correspond with your archival processes to ensure that all logs are transferred to archival storage before being deleted from the Audit Server.

        • Requirement: The log should include notice of any time the clock drifts more than 3 seconds from NIST time.
          Solution: Domain Time II Audit Server has the capability to generate alerts when any monitored system's variance from a reference clock exceeds a threshold you set. Warning entries of these events are also included in the logs.

            Reference Clock
            Audit Server can compare the sampled time of any audited machine to a reference clock. The reference clock's time is used to calculate certain variances and alerts. By default, Audit Server automatically locates the nearest Domain Time II Server to use as its reference clock. Since specifies that variances by shown in relation to NIST, the reference clock setting must be changed.

            Alert Thresholds
            Audit Server has the ability to generate an alert if the time variance on any system exceeds a particular threshold. The -specified requirement is that the log for any machine drifts outside 3 seconds from NIST time should include a notice to that effect. Audit Server will automatically add a warning to the log when any machine exceeds the Any machine time off by... setting on the Audit Server Alerts & Logs tab page.

            Required Configuration Changes to Audit Server

            Set the Reference Clock to NIST: Go to Audit Server's Advanced tab and change the Reference Clock setting to use one of the official NIST Servers (note, you must have the NTP port 123 UDP open on your firewall to allow Monitor to contact a NIST time server).

            Set the Alert Threshold: On Audit Server's Alerts & Logs, make sure the Any machine time off by setting is set to 3 seconds.


        • Requirement: Logs must be maintained and preserved for the period of time and with the accessibility specified in SEC Rule 17a-4(b)
          Solution: Use Domain Time II to collect audit logs and sync data and archive as necessary.

            The period currently specified for this type of record is 3 years, 2 years of which must be in an easily accessible location.

            The Domain Time II Audit Server automatically collects detailed time synchronization data from the network into local disk storage. You may choose to keep the records locally or archive them into offline storage.

        • Requirement: Logs must be maintained in a format permitted under SEC Rule 17a-4(f)
            Domain Time II does not directly address the specific provisions of this regulation (such as the use of optical storage for electronic data records), however it does provide the data in an easily collected and stored manner.

      References
      NYSE Information Memo 03-26, June 10, 2003
      Front End Systemic Capture (FESC) Drop Copy Application Interface Specification, Version 4.1.0
      OATS Technical Reporting Specifications
      OATS Rule 6953. Synchronization of Member Business Clocks
      SEC Rule 17a-4. Records to Be Preserved by Certain Exchange Members, Brokers and Dealers

      Disclaimer
      This document is provided for informational and planning purposes only. The information using in compiling this document was obtained from publically available sources and no representation is made as to the accuracy of the information, nor as to the accuracy of any reading or interpretation thereof. No warranty is made or implied regarding the the usefulness,or suitability of this information for a particular purpose. Further, Greyware Automation Products, Inc. is not liable for any damages, real or consequential, arising from use of this information.

       

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