Home Finance China’s draft cybersecurity rules pose risks for financial firms, lobby group warns

China’s draft cybersecurity rules pose risks for financial firms, lobby group warns

by Enochadmin

HONG KONG, June 2 (Reuters) – China’s proposed cybersecurity guidelines for monetary companies may pose dangers to operations of western corporations by making their information weak to hacking, amongst different issues, a number one foyer group has mentioned in a letter seen by Reuters.

The newest regulatory proposal comes at a time when a string of western funding banks and asset managers are increasing their presence in China, both by organising wholly-owned models or by taking a much bigger share in current joint ventures.

The China Securities Regulatory Fee (CSRC) launched the draft Administrative Measures for the Administration of Community Safety within the Securities and Futures Trade on April 29, and provided a month-long public session on the proposals.

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The draft guidelines search to make it obligatory for funding banks, asset managers, and futures corporations with operations in China to share information with CSRC, enable regulator-led testing, and assist arrange a centralised information backup centre.

Morgan Stanley (MS.N) and HSBC (HSBA.L) are amongst those that have benefited in current months from China’s opening up of monetary sector for foreigners, following Goldman Sachs (GS.N) and JPMorgan (JPM.N), which received nods to run native models final yr.

Foyer group, the Asia Securities Trade and Monetary Markets Affiliation (ASIFMA), in a letter addressed to the CSRC and dated Might 27, expressed considerations of its members in regards to the draft guidelines as they anticipate dangers in sharing delicate information.

The letter’s content material, which has been reviewed by Reuters, has not been reported earlier than.

ASIFMA, which has greater than 160 members comprising main monetary establishments from each the purchase and promote facet, banks, legislation companies, and market infrastructure service suppliers, didn’t affirm the letter and declined to touch upon its content material.

In response to Reuters request for remark, the CSRC mentioned that ASIFMA submitted its opinion on Might 31, two days after the session interval ended.

“Nevertheless, we nonetheless extremely worth the suggestions forwarded by related associations,” it mentioned, including the regulator was “fastidiously learning the opinions and recommendations” and can proceed to speak with them.

The proposed new information guidelines for monetary companies additionally comes towards the backdrop of Beijing’s tightened oversight of information safety primarily within the tech sector as a part of a wider regulatory crackdown, which has roiled the nation’s inventory markets and stalled offshore firm listings.


The draft guidelines require the sharing of information by monetary companies for numerous functions, however the foyer group is anxious passing on delicate information will makes corporations within the sector weak to “hackers and different unhealthy actors”.

World banks and asset managers are additionally pushing again on a requirement to introduce a sector-wide information backup centre.

“This not solely poses large dangers to all core establishments and working establishments on a person foundation, but additionally brings important systemic dangers for the sector in China and globally given the inter-connectedness of the worldwide monetary sector, if the information is compromised or leaked,” the ASIFMA letter mentioned.

The draft guidelines additionally stipulates that the CSRC may conduct penetration-testing — a simulated cyber assault towards the operational system — and system scanning on securities, futures and fund companies.

Nevertheless, ASIFMA flagged considerations of world banks that regulator-led or regulator-commissioned penetration testing pose “actual dangers to companies because of the probably disruptive nature of penetration testing and the sensitivity of testing outcomes”.

“Testing techniques and purposes with out operational context may create important disruption to agency operations,” the foyer group added.

The regulator has not set any timeline for the issuance of the ultimate guidelines or for his or her implementation.

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Reporting by Selena Li; Modifying by Sumeet Chatterjee and Kim Coghill

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