WASHINGTON-The House Financial Services Capital Markets Subcommittee, chaired by Congressman Richard Baker (R-La.), held a hearing last week on the effects of the Sept. 11 terrorist attacks on the nation's financial institutions and markets. Representatives from the General Accounting Office, Securities and Exchange Commission, NASDAQ, New York Stock Exchange, Securities Industry Association, and Bond Market Association testified. The GAO's report found that, although the 15 exchanges, clearing organizations, electronic communications networks, and payment system processors studied had put into place some physical and information security measures and business continuity capabilities since 9-11, "some organizations continued to have limitations in their preparations that increased the risk of their operations being disrupted by future disasters. Because hostile entities have openly threatened to directly attack participants in the U.S. financial markets in the future, the need for these organizations to be prepared has increased." Recommendations included in the GAO report include SEC working with industry to develop strategies to resume trading in securities markets; determine sound business continuity practices; identify the organizations necessary for the markets to resume trading and ensure they implement business continuity practices that at least allow investors to access their cash and securities; and test trading resumption strategies. The report also recommended that SEC improve its operations risk oversight by implementing a regulation to require exchanges and clearing organizations to engage in practices consistent with its automation review policy and increase the program's resources.