“These cyberattacks are scary,” said Jack McIntyre, fixed income portfolio manager at Brandywine. “The good news would be that I guarantee you that the primary operators are having (a) conversation to make sure this doesn’t happen to them. I’m sure everyone is doing a deep dive into their security systems.”
Primary dealers, including the largest Wall Street banks, act as counterparties to the Federal Reserve in open market operations as part of the transmission of US monetary policy. When the U.S. Treasury issues new securities, primary dealers manage the purchases on behalf of the Federal Reserve, which acts as the seller.
Several primary operators did not immediately respond to requests for comment.
The Chinese Foreign Ministry said on Friday that ICBC is seeking to minimize the impact of risk and losses following the attack, which several experts attributed to the Lockbit hacking group.
“Yes, we confirm it,” a Lockbit representative said Friday, without elaborating, in response to a request for comment.
The Lockbit blackmail malware, first seen on Russian-language cybercrime forums in January 2020, is the most widely deployed in the world and has affected 1,700 U.S. organizations, according to the U.S. Cybersecurity and Infrastructure Security Agency. .
Business remains normal at ICBC headquarters, branches and subsidiaries around the world, Chinese Foreign Ministry spokesman Wang Wenbin said at a regular news briefing.
“ICBC has been closely monitoring the matter and has made every effort in emergency response and supervisory communication.”
Britain’s Financial Conduct Authority said it was “liaising with relevant US and UK authorities and businesses to identify any impact on UK financial services”.
In the United States, the Financial Industry Regulatory Authority said it is monitoring any impact on businesses and customers and is working closely with other regulators.
Some players in the market said that trades made through ICBC were not settled due to the incident and that market liquidity had been affected. It was unclear whether this had contributed to the weak outcome of Thursday’s 30-year bond auction.
Investors and traders found it difficult to gauge how much of an impact it had on the market on Thursday, when bond markets were falling after comments from Federal Reserve Chair Jerome Powell.
Even if the impact seemed limited, the attack underscored how large organizations’ systems remain vulnerable, they added.
“A source of liquidity in the market dried up for a long period,” said Jan Nevruzi, U.S. rates strategist at NatWest Markets, who said the attack reduced interdealer volumes and hurt the debt auction.