The Federal Reserve Bank of New York is requiring primary dealers to ensure their backup trading systems are more spread out in case of disruptive events.

The revised policy for primary dealers—institutions that are authorized to trade directly with the government—includes "new geographic dispersion standards and a few minor clarifications," the New York Fed said in a statement on its website Thursday.

The New York Fed oversees the mechanisms and systems the U.S. central bank uses to communicate and trade with Wall Street firms, and operates the trading desk the Fed uses to implement its monetary-policy decisions.

That desk also oversees all auctions of government debt on behalf of the Treasury Department. Following the Sept. 11, 2001, terrorism attacks and superstorm Sandy in 2012, the New York Fed has been beefing up its own backup market operations site in Chicago.

The new standards outlined by the New York Fed "require primary dealers to employ geographic dispersion between their primary and secondary locations to allow participation in desk operations even amid wide-scale disruptions," such as a large terrorism or natural disaster event.

The list of 22 primary dealers comprises a range of bank-owned and independent securities-trading firms, including Goldman Sachs & Co. and J.P. Morgan Securities LLC as well as Jefferies LLC and Cantor Fitzgerald & Co. In that role, they must meet certain obligations, including participation in Fed trading operations and providing the Fed with market information.

The statement said primary dealers would have a transition period in which they would be allowed to gear up for the changes.

The New York Fed added the following to its policy: "Primary dealers' disaster recovery capabilities, as reflected in their business continuity plans and routinely tested, should ensure that robust end-to-end participation in New York Fed's trading desk operations and Treasury auctions (including trading, clearing and settling) will occur even amid a wide-scale disruption in the firm's primary location by employing geographic dispersion between primary and secondary locations."

Write to Katy Burne at katy.burne@wsj.com

(END) Dow Jones Newswires

March 24, 2016 11:55 ET (15:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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