Cyber security is the greatest threat to markets and governments around the world, according to the Depository Trust & Clearing Corp., which processes U.S. stock trades.
The New York-based clearinghouse cited eight key concerns to the financial industry such as new regulations, high frequency trading, the risk to counterparties defaulting, collateral requirements and natural disasters, according to a report published today titled “Beyond the Horizon.”
“Given the diverse and global nature of cyber-attacks, DTCC does not expect this risk to dissipate significantly in the near term,” the firm said in the report.
DTCC’s findings on computer security echo a July study co-authored by the World Federation of Exchanges and the International Organization of Securities Commissions. The two groups said a “significant” number of exchanges fought off sabotage via the Internet in the last year. About 53 percent of exchanges surveyed have been hit by a cyber-attack in the last year, the report said.
American venues were most likely, with 67 percent saying they had to fight them off, the WFE and IOSCO study showed. About 89 percent said it represents a systemic risk.
In February 2011, suspicious files were discovered on a Nasdaq OMX Group Inc. website that facilitates director communication among listed companies, prompting the exchange operator to start an investigation with federal authorities. The trading platforms operate independently from the company’s “web-facing” services, the company said at the time.
The New York Stock Exchange website faced threats from a hacker group in October 2011. The venue said its website functioned without interruption on the day of the threatened intrusion.
Technology and the risk it poses to markets is under increasing scrutiny after breakdowns at Knight Capital Group Inc. drove the firm to the brink of insolvency. The mishap spurred calls in the U.S. Congress to examine whether increasing automation is damaging the integrity of the U.S. equity market, the world’s largest.