Velocity Capital LLC
BUSINESS CONTINUITY PLAN
199 Water Street, 8th Floor New York, NY 10038
(917) 494-6375
I. Introduction
Velocity Capital, LLC (“Velocity” or the “Firm”) maintains this Business Continuity Plan (“BCP”), in accordance with the requirement of FINRA Rule 4370. The Firm’s BCP provides procedures for response and recovery in the event of a significant business disruption (“SBD”). The BCP is intended to: (i) identify responsible personnel in the event of a disaster; (ii) safeguard employees’ lives and Firm property; (iii) evaluate the situation and initiate appropriate action; (iv) recover and resume operations to allow continuation of business; (v) protect books and records; and (vi) allow our customers to transact business. In the event the Firm determines that it is unable to continue its business, it will assure customers prompt access to their funds and securities. In developing this BCP, the Firm considered, among others, the following factors: the types of business it conducts, systems critical to support its business, and the location of offices and personnel.
A. Employees’ Responsibilities
All employees are required to be familiar with the BCP so that they can understand their respective responsibilities and respond accordingly in the event of an SBD. It is the responsibility of each employee to assure that his/her current home address, telephone number, emergency contact name and telephone number (as set forth in Appendix A to the BCP) are correct and advise his or her supervisor of any changes to that information so that updates can be made accordingly.
B. Updates to the BCP
The Plan is reviewed on an annual basis and updated in response to any material change to the Firm’s operations, structure, business, or location. The BCP requires all departments to identify those systems, documents, files and programs that are essential to its operation. The identified items are duplicated and preserved off-site for use in the event of an emergency.
C. Implementation of the BCP
The BCP has been designed to be implemented in the event of a disaster that results in an SBD. Generally, this would include:
- Destruction of the Firm’s offices or facilities, whether by natural causes or by other means;
- Loss of life or major injuries to personnel in an office location that disables that office’s ability to conduct business;
- Disruption of service from a critical service provider; or
- Disruption of service due to wide-ranging regional outages (e.g., a power outage).
Whether all or only parts of the Plan are implemented depends on the nature of the disruption. In the event of an emergency that triggers the implementation of the BCP, Designated Supervisors will contact each employee to provide instructions and information. During an emergency and/or any subsequent resumption of business thereafter, employees must make every reasonable effort to maintain the confidentiality of information belonging or pertaining to the Firm. Employees are reminded that they must continue to follow Firm procedures during a disaster or major business disruption.
II. Emergency Contact Persons
The Firm’s two emergency contact persons are:
| Matteo Amato Chief Financial Officer 1301 Route 36, Suite 109 Hazlet, NJ 07730 Tel: (201) 706-7152 mamato@velocityCapitalllc.com | Jeff Smith Chief Compliance Officer 199 Water Street, 8th Floor New York, NY 10038 Tel: (917) 494-6375 jsmith@velocityCapitalllc.com |
The Firm will provide FINRA with the contact information for these individuals through the FINRA Contact System (FCS). The Firm’s Chief Compliance Officer will promptly notify FINRA of any change in this information through FCS (but no later than 30 days following the change) and will review, and if necessary update, this information within 17 business days after the end of each calendar year.
III. Firm Policy
A. Significant Business Disruptions (SBDs)
The Firm’s plan anticipates two kinds of SBDs, internal and external. Internal SBDs affect only the Firm’s ability to communicate and do business, such as a fire in our building. External SBDs prevent the operation of the securities markets or a number of firms, such as a terrorist attack, a city flood, or a wide-scale, regional disruption. Our response to an external SBD relies more heavily on other organizations and systems, including Inteliclear, which provides real-time, integrated securities processing that automates brokerage accounting and back office functions, DTCC and Sungard Securities Finance, LLC’s Loanet system, through which the Firm processes its stock loan transactions.
B. Approval and Execution Authority
Roy Yan, a registered principal who serves as the Firm’s Chief Executive Officer, is responsible for approving the plan and for conducting the required annual review. Jeff Smith, the Firm’s Chief Compliance Officer, has the authority to execute this BCP.
C. Plan Location and Access
Copies of the current and prior versions of this BCP and the annual reviews that have been conducted shall be retained as follows:
- A current hard copy shall be retained by Compliance with a record of the registered principal’s approval.
- Prior versions (including approvals) are retained on the Firm’s document repository.
IV. Business Description
The Firm is engaged in the following activities:
- Equity Locate Services — The Firm provides security borrow locate services to broker dealers, hedge funds and other institutions, and day trading firms. Customers access our locate services directly via industry standard front-end EMS trading systems such as DAS and VTrader, which communicate with our proprietary locate system using FIX protocol.
- Securities Lending Services — The Firm runs a securities lending conduit book that involves borrowing securities for on-lending purposes for a spread, and will also serve as a vehicle to borrow securities to deliver into the clearing agents of our Equity Locate Service clients to cover the Locates given. Securities Lending trades will be executed and managed on Loanet and updated into Inteliclear, which will serve as the books and records of the Firm.
- Proprietary Trading — The Firm runs proprietary trading books trading Equities, Equity and Index Options and Equity Warrants.
- Introducing Broker for Customers
The Firm’s proprietary business is processed through InteliClear and its stock loan transaction activity is processed via Loanet, a service provided by Sungard Securities Finance LLC.
Inteliclear provides the Firm with a real-time, integrated securities processing system that automates our brokerage accounting and back-office functions. The Firm will use Inteliclear in support of our correspondent clearing activity. The system is linked to both NSCC and DTCC and incorporates several important features, including cage management and cash management, which enables the posting of cash receipts, disbursements and journal entries.
SunGard’s Loanet is a multifaceted solution for stock loan, serving broker-dealers, custodian banks, agent lenders, and other participants in the securities lending markets. Loanet provides the Firm with a real-time interactive platform across which the Firm can communicate and complete stock loan transactions. The Firm uses Loanet to automate securities borrowing and lending activities, helping us to handle large transaction volumes efficiently.
Contact information for Inteliclear and Sungard / FIS is set forth below.
| Inteliclear, LLC 40 Brunswick Ave., Edison, NJ 08817 (732) 650-1800 http://www.inteliclear.com Firm Contact: Guy Powell, Managing Director Office: (860) 866-4301 Cell: (917) 825-2400 gpowell@inteliclear.com | FIS Global (Loanet / SunGard) 12B Manor Parkway, Salem, NH 03079 (609) 898-5980 Firm Contact: John Scaramucich Vice President, Sales and Marketing Office: (917) 576-6178 John.scaramucich@fisglobal.com |
V. Office Locations
The Firm’s principal place of business and main Office of Supervisory Jurisdiction (“OSJ”) is located at:
| Main OSJ | 199 Water Street, 8th Floor, New York, NY 10038 | (917) 494-6375 |
| Additional OSJ | 1301 Route 36, Building 2 Suite 6, Hazlet, NJ 07730 | (201) 706-7157 |
| Additional OSJ | 2201 NW Corporate Blvd., Suite 105, Boca Raton, FL 33431 | (561) 244-8089 |
| Other Office | 287 Bowman Ave, 3rd Floor, Purchase, NY 10577 | (646) 568-2855 |
The Firm’s employees travel to these offices by means of foot, car, subway, train, bus, and boat.
VI. Alternative Physical Location(s) of Employees
In the event of an SBD, we will move our staff from affected offices to the closest of our unaffected office location. If the main office is not available to receive staff, we will move them to:
287 Bowman Avenue, 3rd Floor, Purchase New York
In a catastrophic event employees in NY will be moved to above address or will be enabled to work from home to access Loanet and DTC. Critical employees can access all other necessary systems by Google cloud services.
Rule: FINRA Rule 4370(c)(6)
VII. Customers’ Access to Funds and Securities
After approval and in the event of an internal or external SBD, if telephone service is available, our registered persons will take customer orders or instructions; and if our web access is available, the Firm will post on its website instructions regarding how customers can access their funds and securities. The Firm will make this information available to customers through its disclosure policy.
If SIPC determines that we are unable to meet our obligations to our customers or if our liabilities exceed our assets in violation of Securities Exchange Act Rule 15c3-1, SIPC may seek to appoint a trustee to disburse our assets to customers. Velocity will assist SIPC and the trustee by providing our books and records identifying customer accounts subject to SIPC regulation.
VIII. Data Back-Up and Recovery (Hard Copy and Electronic)
The Firm maintains its primary books and records and its electronic records at its main office in New York, New York. Matteo Amato is responsible for the maintenance of these books and records. The document types and forms maintained by the Firm include, but are not limited to, Master Securities Lending Agreements (MSLA), the Firm Membership Agreements, New Account Forms and End User License Agreements (EULA), Customer Account information, Clearing Agreements, ledgers, and financial and operational records.
The Firm maintains an infrastructure with data and applications spanning multiple physical storage devices. In the event of a failure to the primary storage device, the secondary devices can be brought online to take the place of the failing devices.
The Firm has contracted with Global Relay for the archiving of the Firm’s e-mail, instant messaging and live chat. In the event of a SBD, the Firm would be able to retrieve its e-mail records from Global Relay. Global Relay maintains its own Disaster Recovery Plans.
On a nightly basis, the primary device data is backed up to an external service provider, HubStor. HubStor is a SEC/FINRA compliant data store solution (https://www.hubstor.net/solutions/compliance/sec-finra/).
For the loss of electronic records, we will either physically recover the storage media or electronically recover data from backup, or, if our primary site is inoperable, continue operations from our alternate location.
IX. Financial and Operational Assessments
A. Operational Risk
In the event of an SBD, we will immediately identify what means will permit us to communicate with our customers, employees, critical business constituents, critical banks, critical counterparties, and regulators. Although the effects of an SBD will determine the means of alternative communication, the communications options we will employ will include, but not be limited to, the Firm’s website, telephone, voice mail, secure e-mail and live chat. In addition, we will retrieve our key activity records as described in the section above, Data Back-Up and Recovery (Hard Copy and Electronic).
B. Financial and Credit Risk
In the event of an SBD, we will determine the value and liquidity of our investments and other assets to evaluate our ability to continue to fund our operations and remain in capital compliance. We will contact our customers, critical banks, and investors to apprise them of our financial status. If we determine that we may be unable to meet our obligations to those counterparties or otherwise continue to fund our operations, we will request additional financing from our bank or other credit sources to fulfill our obligations to our customers and clients. If we cannot remedy a capital deficiency, we will file appropriate notices with our regulators and immediately take appropriate steps, including consulting with our outside counsel Andrew Hurni, Chief Executive Officer Roy Yan, and our Financial Operations Principal, Matteo Amato. We will then consult with our local FINRA Office for advice.
X. Mission Critical Systems
The Firm’s “mission critical systems” are those that ensure prompt and accurate clearance of securities transactions, including comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts, and the delivery of funds and securities. More specifically, these systems include:
- Loanet
- Inteliclear
- VTrader
- Sterling Risk Engine
- Velocity Locate System
- Sage Intacct
- WEX, Silexx, and FIX-based Execution Services (where applicable)
- OCC
- DTCC
We have primary responsibility for establishing and maintaining our business relationships with our customers and have sole responsibility for our mission critical functions. All transactions are sent to Inteliclear, which provides through contract the comparison, allocation, clearance and settlement of securities transactions, the maintenance of customer accounts, access to customer accounts and the delivery of funds and securities.
Velocity Capital maintains a business continuity plan for the InteliClear solution, deployed in a FINRA-regulated datacenter maintained by Tetherview, and the capacity to execute such plan. In the event the BCP plan needs to be executed, the Velocity IT team will execute the plan as discussed within this document.
All InteliClear data and our records are backed up at a remote site maintained in a geographically separate area with the capability to conduct the same volume of business as its primary site.
The firm’s Velocity Locate System is an internal front end located manger that links to External systems. The source code repository is GitHub. Github is a web-based service that implements Git which takes a distributed methodology towards source code versioning, and collaboration. Github being inherently distributed means there are multiple copies of the source code available to those granted permission. There are several repositories under the Velocity Capital Account on Github, each representing a logical part of the Velocity Capital Locate System. For example: The Web Locator, Admin Console, FIX Service, App Engine, Database and Utility Programs each have their own repository. Velocity Capital relies on the Github.com Service for implementing redundancy of each repository. In addition to the Github.com Master repositories, a local copy of the repository is kept in the office.
Recovery-time objectives provide concrete goals to plan for and test against. They are not, however, hard and fast deadlines that must be met in every emergency situation, and various external factors surrounding a disruption — such as time of day, scope of disruption, and status of critical infrastructure, particularly telecommunications — can affect actual recovery times. Recovery refers to the restoration of clearing and settlement activities after a wide-scale disruption; resumption refers to the capacity to accept and process new transactions and payments after a wide-scale disruption. Velocity Capital maintains a relationship with Tetherview for the geographically separate backup site, and through their Software Operations Agreement, Tetherview has provided Velocity with a three (3) hour recovery time upon declaration of an SBD.
Finra has approved the firm for customer trading and custody. When the business commences for customers, the Firm receives orders via the various Order Management Systems (“OMS”) such as VTrader. During an SBD, either internal or external, we will continue to take orders through any methods that are available and reliable, and in addition, as communications permit, we will inform our customers when communications become available to tell them what alternatives they have to send their orders to us. Customers will be informed of alternatives by email and by posting a notice on our website. If necessary, orders may be taken via telephone or live chat if the Firm has the ability to communicate with the Firm’s access providers or market centers.
Currently, the Firm receives requests for stock locates from customers via telephone and web site at https://trader.locate.velocityCapital.llc/#/login. During an SBD, either internal or external, we will continue to take orders through any methods that are available and reliable, and in addition, as communications permit, we will inform our customers when communications become available to tell them what alternatives they have to send their orders to us. Customers will be informed of alternatives by email and by posting a notice on our website. Currently, the Firm enters requests for stock loans and borrows by recording them on paper and electronically via Loanet.
Loanet maintains a business continuity plan and the capacity to execute that plan. They represent that they will advise us of any material changes to their plan that might affect our ability to maintain our business. In the event they execute their plan, Loanet represents that they will notify us of such execution and provide us equal access to services as their other customers. Loanet represents that it backs up our records at a remote site and operates a back-up operating facility in a geographically separate area with the capability to conduct the same volume of business as its primary site.
In the event of an internal SBD, we will enter and send records by the fastest alternative means available, which may include accessing Loanet from an alternate location. In the event of an external SBD, we will maintain the order in electronic or paper format and enter the order into Loanet by the fastest means available when it resumes operations.
DTCC connectivity is available through our Tetherview infrastructure, which is accessible from our offices or remotely. In the event of an SBD, DTCC systems are accessible from alternate geographical locations.
FIX order submission mechanisms, where offered to customers, are supported through external vendors such as VCT Technologies. All execution services vendors that Velocity Capital utilizes have well-maintained SBD and BCP plans and are hosted in a combination of datacenters that are SOC2 compliant, such as Equinix, GCP, and Tetherview. The execution services vendors maintain primary, backup and DR sites and represent that in the case of an SBD they will notify us and provide minimal to no business disruption. Velocity Capital maintains up-to-date documentation with its vendors, including BCP plans, SOC2 compliance reports (or bridge letters) and penetration testing reports; such reports can be furnished upon request.
XI. Alternate Communications Between the Firm and Customers, Employees, and Regulators
A. Customers
We communicate with our customers using the telephone, e-mail, our website, and U.S. mail. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. For example, if we have communicated with a party by e-mail but the Internet is unavailable, we will call them on the telephone and follow up where a record is needed with paper copy in the U.S. mail.
B. Employees
We communicate with our employees using the telephone, e-mail, and in person. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party. We will also employ a call tree so that senior management can reach all employees quickly during an SBD. The call tree includes all staff home and office phone numbers.
The person to invoke use of the call tree is Roy Yan.
| Caller | Call Recipients |
| Roy Yan (646) 207-3207 | Jeff Smith (917) 494-6375 |
| Jeff Smith (917) 494-6375 | Munaf Merchant (203) 979-9960 & Tim Connelly (917) 558-3168 |
C. Regulators
We are currently members of the following SROs: FINRA, CBOE BZX BYX EDGA and EDGX, MEMX, MIAX, NASDAQ, NASDAQ-BX, NASDAQ-PHLX, NASDAQ Texas, Long Term Stock Exchange, Miami Intl Securitas, OCC and DTCC. We communicate with our regulators using the telephone, e-mail, fax, U.S. mail, and in person. In the event of an SBD, we will assess which means of communication are still available to us, and use the means closest in speed and form (written or oral) to the means that we have used in the past to communicate with the other party.
XII. Critical Business Constituents, Banks, and Counter-Parties
A. Business Constituents
We have contacted our critical business constituents (businesses with which we have an ongoing commercial relationship in support of our operating activities, such as vendors providing us critical services), and determined the extent to which we can continue our business relationship with them in light of the internal or external SBD. We will quickly establish alternative arrangements if a business constituent can no longer provide the needed goods or services when we need them because of an SBD.
B. Banks
We have contacted our banks and lenders to determine if they can continue to provide the financing that we will need in light of the internal or external SBD.
The bank maintaining our operating account is BMO. If our bank is unable to provide financing we will seek to provide alternative financing from our additional bank, Lakeside Bank. Lakeside Bank is a registered settlement bank for DTCC.
| Bank | Lakeside Bank | Bank of Montreal (BMO) |
| Address | 141 W. Jackson Blvd. Suite130 A, Chicago IL 60604 | 115 South LaSalle Street 18W, Chicago, IL 60603 |
| Contact | Fanny Yuen Vice President, Business Banker (T) 312-435-1613 fyuen@lakesidebank.com | Krupa Tantuwaya Managing Director, Global Client Management (T) 312-461-2491 Krupa.Tantuwaya@bmo.com |
C. Counterparties
We have contacted our critical counterparties, such as other broker-dealers or institutional customers, to determine if we will be able to carry out our transactions with them in light of the internal or external SBD. Where the transactions cannot be completed, we will work with them or contact those counterparties directly to make alternative arrangements to complete those transactions as soon as possible.
XIII. Regulatory Reporting
The Firm is subject to regulation by the U.S. Securities and Exchange Commission, FINRA, DTCC, and the State of New York Securities Commission. The Firm currently files reports with its regulators in hard copy through use of the U.S. mails and electronically by fax, e-mail, and Internet applications. In the event of an SBD, the Firm will check with the SEC, FINRA, and its other regulators to determine which means of filing are still available and use the most expedient available communication system. In the event that we cannot contact our regulators, we will continue to file required reports using whatever communication means remains available. The designated Response Team person will contact regulators regarding any major business disruption and plans for continuing business.
XIV. Disclosure of Business Continuity Plan
We provide in writing a BCP disclosure statement to customers at account opening. We also post the disclosure statement on our website and will mail it to customers upon request. Our disclosure statement is attached.
XV. Upadates and Annual Review
Our firm will update this plan whenever we have a material change to our operations, structure, or business. In addition, our firm will review this BCP annually, on or about the third week in April, to modify it for any changes in our operations, structure, business, or location.
Appendix A: Disaster Recovery Plan Contact Information
This appendix includes all points of contact of key positions and organizational personnel. It includes mobile and alternate telephone numbers as applicable.
| Name | Role | Mobile | Alternate | Systems | Group |
| Roy Yan | CEO | 646-207-3207 | — | BMO Bank, InteliClear, Velocity Locate System | Executive |
| Matteo Amato | CFO | 646-415-7805 | — | InteliClear, QuickBooks, Sage Intacct, DTCC, BMO Bank | Executive |
| Jeff Smith | CCO | 917-494-6375 | — | — | Executive |
| Ralph Marzella | Sec. Lend. Operations | 917-656-7045 | 718-967-1467 | InteliClear, Loanet, DTCC, Velocity Locate System | Stock Loan |
| Tim Connelly | CIO | 917-558-3168 | — | — | Executive |