ASSIGNMENT ON CONTINGENCY PLANS

Submitted to- Nidhi Bhatia Submitted by- Mrinal Vijayvargiya Section A Mba 3C

Introduction A contingency is an unexpected event or situation that affects the financial health, professional image, or market share of a company. It is usually a negative event, but can also be an unexpected windfall such as a huge order. Anything that unexpectedly disrupts a company's expected operation can harm the company even if the disruption is because of a windfall. That is why companies create contingency plans for many possible situations, so company management has a pre-researched plan of action to immediately follow. Some threats usually covered in contingency plans are crisis management, business continuity, asset security, mismanagement and reorganization.

Crisis Management Many types of crises that can affect the well-being of a company include natural disasters, terrorist attacks, fire in the warehouse, on the job injuries or even angry customers. Plans to deal with crises generally include department by department SWOT analysis (strengths, weaknesses, opportunities, threats) that attempt to identify vulnerabilities and potential challenges.

EXAMPLE OF CONTINGENCY PLANS Starting and running a small business is an inherently risky practice because there is no guarantee that a new venture will attain profitability. Unforeseen events or disasters can be especially harmful to a business. For example, a fire, earthquake or flood can make it impossible to continue operating a business normally. A contingency plan is a business document that lays out a course of action a business will take in response to future events. Contingency Plan Basics The purpose of a contingency plan is for a business to have a specific set of instructions in place if certain events that may interrupt normal business operations occur. For example, a massage business might plan to move operations to a different location if its main location is damaged by a natural disaster. Similarly, a pizza shop might plan to start an aggressive advertising campaign if a competing pizza shop opens nearby. Contents of a Contingency Plan The contents of a contingency plan can vary significantly from one business to another based on the business model and the types of goods and services they provide. Nevertheless, the plan should contain a list of possible disasters, emergencies and threats plus a set of instructions that detail how the business will respond to each one. A contingency plan should also cite which managers or employees are responsible for carrying out the plan's instructions. For example, a restaurant's contingency plan might call for its owner to lay off workers and to stop ordering materials and equipment if it loses its physical location due to a fire. The plan might then call for scouting then leasing a new location and rehiring a reduced amount of staff, only

returning to the pre-disaster staff level when business establishes itself in the new location. Benefits A contingency plan allows a business to respond to disasters and threats quickly and deliberately, which can potentially save time and money. Unexpected events can cause stress or even panic, which may make it difficult to create level-headed solutions when a situation occurs. Considerations Certain organizations offer resources to business owners, such as templates for contingency plans that can serve as examples or frameworks to create new plans. For example, the Federal Emergency Management Agency offers a simple business continuity plan template that owners can use to make plans to respond to natural disasters, while the Financial Industry Regulatory Authority offers a more detailed general business contingency plan template (see Resources).

CONTINGENCY PLAN FOR TOCOM INDUSTRIES

Contingency Plan for Cases Including System Failure Tokyo Commodity Exchange, Inc. April 1, 2012 Disclaimer: This English translation is being provided for informational purposes only and represents a desire by the Exchange to promote better understanding of the Exchange by non-resident participants. While care has been taken to ensure that the translation is accurate and complete, Tokyo Commodity Exchange, Inc. accepts no liability or responsibility for any loss or damages, including trading losses, that may be incurred from any inaccuracy or omission in the English translation. In the event of discrepancies between the English version and the original Japanese version, the Japanese version shall prevail. Any dispute that may arise within or without a court of law with regard to the meaning of the words, provisions and stipulations of the rules, regulations and agreements shall be resolved in accordance with the Japanese texts. Contingency Plan for Cases Including System Failure April 1, 2012 Tokyo Commodity Exchange, Inc Tokyo Commodity Exchange, Inc. (TOCOM or the Exchange) has prepared the following Contingency Plan (CP) for transactions in the markets of the Exchange, to respond to situations affecting the continuation of trades at the Exchange or when it is deemed inappropriate to continue trading due to the failure of the Exchanges Trading System and/or other related systems. In addition, the CP shall be applicable in cases not only limited to system failures, but also in cases of force majeure or suspension of utility services, such as electrical power and telecommunications, or other factor resulting in the discontinuation of trades in the TOCOM markets or in the

continuation of trades being deemed inappropriate. 1. Basic Responses, Corresponding Regulations etc.

Failing System etc. Supposed Failure Type/Scope Exchange Response Reasoning Main Corresponding Regulations Exchange Trading System (1) If trading in all products (including Commodity Index; the same should apply hereinafter) became difficult. (2) If trading in part of the products became difficult. The trading session for all products shall be suspended. Because if the Trading System becomes inoperative due to a failure, etc. of the Trading System, there is no alternative. Because spread transactions by SCO and Options Transactions are derivatives of Physically Delivered Futures Transactions. Although Cash-settled Futures Transactions (mini contracts) are derivatives of Physically Delivered Futures Market Rules Article 80 (Measures to be taken in cases of Trading system failure, etc.) The trading session for the product(s) experiencing the failure shall be suspended. The trading session for spread transactions by SCO or Options Transactions related to the product experiencing the failure shall also be suspended. If the Exchange deemed that the failure, etc. may also affect the trading session of other products, the trading session of other products may be interrupted or suspended. Failing System etc. Supposed Failure Type/Scope Exchange Response Reasoning Main Corresponding Regulations Market Rules Article 80 (Measures to be taken in cases of Trading system failure, etc.) (3) If trading in Cash-settled Futures Transactions (mini contracts), spread transactions by SCO, or Options Transactions became difficult. (4) If trading in some of the contract months of a product became difficult. The trading session for the contract month(s) or series experiencing the failure shall be suspended (the trading session for the underlying Physically Delivered Futures Transactions shall continue) The trading session for the contract month(s) experiencing the failure shall be suspended. However, after careful consideration of the status of the failure, etc. and if

deemed necessary by the Exchange, the trading session for all the contract months of said product may be suspended. If there are spread transactions by SCO or Options Transactions related to the product experiencing the failure, the trading session of the corresponding contract month(s) or series shall also be suspended. Additionally, for transactions in the current contract month on the Last Trading Day or for transactions in the current contract month on the Last Trading Day of Options Transactions, if it is difficult to resume the trading session during the day session, the trading session for said contract month shall not be postponed to the following Clearing Period or thereafter. (*) Transactions, in order to provide alternative trading opportunities, the trading session shall be continued. In order to continue trading in the underlying asset whenever possible and to provide trading opportunities to market participants. In order to continue trading in the contract month(s) not affected by the failure whenever possible and to provide trading opportunities to market participants. 3 Failing System etc. Supposed Failure Type/Scope Exchange Response Reasoning Main Corresponding Regulations (5) If the trading session of a component of the Commodity Index (designated contract months; components for which the trading session is closed excepted) is suspended (6) If notices, including Order Reception, Order Cancellation and Execution, can no longer be made. (7) If providing market information became difficult following the failure, etc. of TOCOM market data dissemination (excluding the TOCOM website). When the Exchange recognized that the components experiencing the suspension represent a substantial portion of the Component Weight used in calculating the index, the trading session for the Commodity Index shall be suspended. The trading session for the product(s) experiencing trouble shall be suspended.

After careful consideration of the status of the failure, etc. and if deemed necessary by the Exchange, the trading session may be suspended. Because the formation of fair Index Points may be hindered, since new prices are not being formed in a considerable number of components (designated contract months) Because market participants may be confused since they are unable to understand the trading situation.

 Because the formation of fair prices may be hindered since trading is taking place without sufficient communication on the market situation. * See attached Procedure in Case of Day Session Suspension on Last Trading Day following Failure when Resuming Day Session became Difficult. 4 Failing System etc. Supposed Failure Type/Scope Exchange Response Reasoning Main Corresponding Regulations Trade Members, etc. in-house system If placing orders became difficult following the failure, etc. of the in-house system (including ISV and third-party operated systems) of a Trade Member, Broker Member or Remote Trade Member (Trade Members, etc.). The trading session shall continue. However, if the Exchange deemed that it has become difficult for a substantial number of Trade Members, etc. to place orders following the failure, etc. of in-house systems, the trading session for the market(s) may be suspended. In order to provide trading opportunities to market participants whenever possible. However, if the formation of fair prices is deemed to be hindered when a substantial number of Trade Members, etc. cant participate, the session may be interrupted or suspended. Clearing organization If the business of assuming commodity transaction debts (i.e: clearing business) is temporarily suspended or if the settlement deadline is postponed by the clearing organization (which shall mean the Japan Commodity Clearing House Co., Ltd.; the same shall apply hereinafter). After consideration of the measures etc. taken by the clearing organization, the Exchange may suspend the trading session. In order to avoid an increase in settlement risk due to the accumulation of unsettled trades. Market Rules Article 8 (Temporary Opening and Closing of Session), Article 35-3 (Settlement of Transaction in Commodity Markets) and Article 82 (Emergency Measures).

If a system failure, etc. occurs due to force majeure or suspension of utility services, such as electrical power and telecommunication network. 1 through 3 shall apply mutatis mutandis.

Same as 1 through 3.

Market Rules Article 8 (Temporary Opening and Closing of Session), Article 35-3 (Settlement of Transaction in Commodity Markets) and Market Rules Article 80 (Measures to be taken in cases of Trading system failure, etc.). 5 Failing System etc. Supposed Failure Type/Scope Exchange Response Reasoning Main Corresponding Regulations 6 Other If it is deemed that a failure of the Exchanges Trading System may occur due to a number of orders or contract executions that exceeds the processing capacity of the Exchanges Trading System. After careful consideration of the order, execution and trading status etc., and if deemed necessary by the Exchange, the trading session for all or part of the products may be suspended. Because the continuity of transactions will be affected.

Market Rules Article 80 (Measures to be taken in cases of Trading system failure, etc.) 2. Notification to /Contact with Members, etc. upon system failure, etc. In case of an emergency, such as a system failure, TOCOM will notify or contact Members and data vendors (including ISV connection providers) of the failure status (details on the failure, trade restrictions status, recovery prospects, etc.) and of the procedures to follow (instructions to resume the trading session, operation schedule after the trading session resumed, etc.) by sending emails and making announcements on the TOCOM website, or by using any of these communication means available at that time. TOCOM will also notify or contact other related organizations of the failure status, etc.