The ICBC hack reverberates with manual settlement of the bank’s Treasury trades for days. Following a ransomware assault on China’s largest bank, the Industrial and Commercial Bank of China’s access to an electronic settlement mechanism for U.S. Treasury securities remained halted on Friday, according to sources.
The attack is the most recent in a series of ransom-demanding cyberattacks that hackers have claimed this year, as verified by ICBC on Thursday. The bank’s U.S. division, ICBC Financial Services, stated that it was looking into the assault that caused some system disruptions and was moving on with its recovery.
On Friday, two people who knew the situation stated that things would take days to return to normal. According to the sources, BNY Mellon was manually settling Treasury securities deals with the ICBC and was awaiting confirmation from a third party that it was secure enough to re-establish the ICBC’s connection to its settlement platform.
They stated that the procedure is probably going to start next week. As per its website, BNY is the exclusive settlement agent for U.S. Treasury bonds. “These hacks are frightening,” Jack McIntyre, a Brandywine fixed-income portfolio manager, stated. The good news is that your key dealers are, I promise, having a conversation to ensure that this doesn’t happen to them. Everyone is undoubtedly taking a close look at their security measures.”
The biggest Wall Street banks and other primary dealers are the Federal Reserve’s counterparties in open market operations, crucial in carrying out U.S. monetary policy. Primary dealers acquire new securities from the U.S. Treasury on behalf of the Federal Reserve, which serves as the seller.
Several prominent merchants did not immediately answer requests for comments. ICBC did not answer queries seeking comment.