Published: 18 September 2015
By Garrett Baldwin as published in Modern Trader Magazine
This is a story about cyber security and its effect on traders.
It’s about vulnerabilities in a financial system that over-relies on technology to make trading faster and more efficient.
For traders and investors, the desire for ease-of-use and functionality that expedites buying and selling has been developed by application developers who typically underestimate security risks.
For brokerages, investment firms and exchanges, cyber security has become one of the most important concerns of the 21st century. The July software glitch at the New York Stock Exchange (NYSE) immediately reminded traders of the 2010 event in which Russian hackers placed a “cyber bomb” on the Nasdaq.
It never detonated, but it’s curious that it took four years for government officials to conclude their investigation and release information to the media. Cyber attacks are a sensitive topic.
No company wants to admit that it has been hacked. No exchange wants to divulge the reality that hackers are constantly looking for vulnerabilities in their systems. And no one wants to explain to traders how they should react after a breach in the markets.
It’s time to have an honest conversation about cyber security.
What are the risks in the future, and, more importantly, what can traders and investors do to ensure they are taking the right steps to protect themselves?