Treasury Markets Disrupted by ICBC Ransomware Attack
The Financial Times reports a ransomware attack on China’s largest bank, ICBC, affecting its New York unit and disrupting the $25tn US Treasuries market. Wall Street is grappling with the aftermath, revealing vulnerabilities in the world’s largest and most liquid Treasury market. ICBC Financial Services, compromised by the attack, resorted to using a USB stick to transmit trading data to BNY Mellon for settling trades. This led to disruptions, with hedge funds rerouting trades and an impact on Treasury market liquidity.
BNY, the largest custodian bank globally, has disconnected ICBC from its platform, relying on manual workarounds until the bank’s safety is verified. ICBC’s US unit required a $9bn capital injection from its parent company due to unsettled trades with BNY. The hack possibly contributed to a sell-off in long-dated Treasuries. US Treasury Secretary Janet Yellen is in contact with Chinese officials, stating no observed impact on the Treasury market. The Securities and Exchange Commission monitors for fair markets, and the Chinese foreign ministry commends ICBC’s handling of the situation. The incident underscores the increasing threat of ransomware attacks, urging companies to reevaluate their defense strategies.
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