It takes surprisingly little to rattle the world’s markets.
A fake tweet about explosions at the White House caused the Dow Jones to fall more than 140 points on April 23. Glitches in high-frequency trading software can send stocks plummeting, as they did during the “flash crash” of May 6, 2010, when the Dow dropped 1,000 points in mere minutes. But the real threat to global markets could come from cyberattacks.
A new report says 53 per cent of exchanges around the world were hit by a cyberattack in 2012, and when only large exchanges are counted, that number rises to 80 per cent. According to the survey by the International Organization of Securities Commissions and the World Federation of Exchanges, the most commonly reported attacks—virus and denial of service—are disruptive, but so far have not been costly.
Most exchanges fear something much bigger, however, like an attack that could infiltrate markets and, over time, steal information, manipulate data or block trades altogether. The nature of global markets—highly integrated and digital—multiplies the threat, says the report, which concludes that such an attack could destroy market confidence.
Investors may be easily spooked, but it’s what they can’t see that’s keeping exchange officials up at night.