Treasury settlement delays continue in wake of ICBC hack
TRADERS in the US$26 trillion Treasury market are still finding it hard to settle transactions more than a day after a cyberattack on Industrial & Commercial Bank of China (ICBC).
The Federal Reserve said on its website on Friday (Nov 10) that a “service issue” is impacting the Fedwire Securities service, which handles settlements for US Treasuries. A similar issue was reported on Thursday when bond-market participants were grappling with a hack on ICBC that prevented it from clearing swathes of trades. That issue was reported resolved by the Fed overnight.
The Fed did not immediately respond to a request for further comment on whether the latest service issue is related to ICBC’s attack. The central bank will continue its service for “BNY Mellon Customer” until at least 7.00 pm New York time, according to the Fed’s website.
“It’s difficult to gauge the impact of something like this directly,” said Gennadiy Goldberg, head of US interest rates strategy at TD Securities. “It’s definitely not encouraging.”
Non-delivery of US debt pledged as collateral surged on Thursday as both the repo market and Fedwire settlement system stayed open late to try to minimise the impact of the hack, which forced US clients of ICBC to reroute transactions.
The bank confirmed on Thursday that it had experienced a ransomware attack that disrupted some systems at its ICBC Financial Services unit. The company said it isolated the affected systems and that those at the bank’s head office and other overseas units were not impacted, nor was ICBC’s New York branch. The extent of the disruption is still unclear, though Treasury market participants reported liquidity was affected.
Meanwhile, US Treasury Secretary Janet Yellen said she’s “not seen an impact” on the US bond market from the cyberattack, speaking at a news conference in San Francisco following a meeting with China Vice-Premier He Lifeng.
Yellen said she’d discussed the matter with He, and that she’s “been working very closely with the Chinese, with the firm and with regulators in the United States” to tackle it. BLOOMBERG
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