Telecommunications vulnerabilities pose significant threat to banking sector

A US working group of banking experts is recommending that the private sector find ways to develop ‘secure and resilient’ telecommunications essential for critical banking functions. The group, known as the Working Group on Government Securities Clearance and Settlement, issued detailed recommendations to the government last week. The Working Group’s focus is on two financial institutions, the Bank of New York and JP Morgan Chase, which constitute the US’s principal resource for clearing services and include clearing services for government securities. Clearing and settlement services involve a comparison of trade details, such as price and terms, and an exchange of payments. Industry, the Federal government, and state governments have been considering the resilience of wholesale banking activities since terrorists destroyed key telecommunications infrastructure on 9/11. The attacks revealed serious operational vulnerabilities, including the concentration of risks created by dependence on the two banking institutions. Full Story