The Securities and Exchange Commission (SEC) invited security and finance experts to Washington yesterday to discuss cybersecurity issues and whether companies and stock markets should be required to immediately disclose attacks and invest in protecting their systems.
SEC commissioner Luis Aguilar said that the agency needed to set up its own cybersecurity task force, particularly in light of the recent high-profile attacks on companies like Target in the US. The team should be “composed of representatives from each division that will regularly meet and communicate with one another to discuss these issues, and, importantly, advise the Commission as appropriate”, he said.
The SEC already requires public companies to disclose information on cybersecurity risks and cyber incidents, though this mostly comes in annual reports rather than on a case-by=case basis – and they only need to speak up if the attack could cause financial damage to the firm. But lawmakers, including Senator Jay Rockefeller, have called for the agency to make these disclosures mandatory.
“This is information every investor has a right to know,” Rockefeller said in a statement to Bloomberg. “Routinely providing this information should be a regular part of practicing business in the era of ‘big data’.”
SEC chair Mary Jo White said before the meeting in Washington that since the guidance on cybersecurity was introduced in 2011, her staff has continued to look at disclosure requirements and what it would take to protect critical infrastructure and these issues would be discussed at the roundtable.
She also said that she expected the SEC to move forward with a new proposed rule, Regulation Systems, Compliance and Integrity, this year. The rule would require stock markets and trading systems under its jurisdiction to test their automated systems for vulnerabilities and inform the commission of cyber attacks, as well as being able to recover their trading operations after technical difficulties within specific time frames.
Commissioner Aguilar pointed out that attacks on stock exchanges were rising: “According to a 2012 global survey of securities exchanges, 89 per cent identified cyber-crime as a potential systemic risk and 53 per cent reported experiencing a cyber-attack in the previous year,” he said.
“The risks facing the capital market infrastructure and regulated entities are of particular concern to the SEC. For instance, a cyber-attack on an exchange or other critical market participant can have broad consequences that impact a large number of public companies and their investors.
“Indeed, given the extent to which the capital markets have become increasingly dependent upon sophisticated and interconnected technological systems, there is a substantial risk that a cyber-attack could cause significant and wide-ranging market disruptions and investor harm,” he warned. ®