ICBC Brokerage Blackout Stopped Email Work
The U.S. broker-dealer of Industrial and Commercial Bank of China (ICBC) was the victim of an extensive cyber hack that led to a complete blackout, with corporate email systems ceasing to function. Employees were forced to switch to Google mail, the details of which are only now being reported. The ransomware attack nearly caused the firm’s bankruptcy, resulting in a temporary $9 billion obligation to BNY Mellon, leaving its net capital far exceeded. The cash-strapped brokerage received a capital injection from ICBC in order to rectify the situation and manually processed trades with the help of BNY Mellon.
Currently, ICBC is collaborating with cybersecurity firm MoxFive to set up secure systems, with the expectation that normal business operations will resume by Monday. In the meantime, the brokerage has requested clients to temporarily suspend business and clear trades elsewhere. The full extent of the attack’s impact on the Treasury market is not yet understood, but it is expected to become a key topic at an upcoming Treasury market conference.
ICBC Financial Services, despite being mid-sized, found itself at the mercy of the cyber attack, with its system outage causing a ripple effect across Wall Street. BNY Mellon played a crucial role in helping the firm clear trades, facilitating a manual process which required ICBC’s parent company to inject capital to avoid default. As the firm aims to resume normal operations, a secondary email system is also being set up soon.
The recent attack highlights the concern over the resilience of the $26 trillion Treasury market and is likely to become a key issue for regulators. It raises questions about the broader financial stability benefits of central clearing and is expected to influence discussions at the upcoming Treasury market conference.
