The Financial Supervisory Commission (FSC) yesterday sanctioned 10 securities companies over failure to exercise proper information security controls regarding their high-speed trading services.
Cathay Securities Co (國泰證券), Concord Securities Co (康和證券) and SinoPac Securities Co (永豐金證券) received the severest fine of NT$1.44 million (US$50,945) each, as they had serious security breaches, Securities and Futures Bureau Deputy Director-General Kuo Chia-chun (郭佳君) told a news conference in New Taipei City.
The fines came after the commission conducted a special inspection of the Taiwan Stock Exchange’s information center in New Taipei City’s Banciao District (板橋) in November last year.
Photo: Kelson Wang, Taipei Times
Securities firms place their servers in the center to use the exchange’s Co-Location service, while the exchange’s matching engine and trading information systems are also housed there.
The inspection found that securities firms failed to apply best practices in how they set up their servers at the center, the commission said.
For example, Cathay Securities installed trading software developed by one of its clients on its server, with the software designed to automatically place orders for the client and enable the investor to trade ahead of competitors, Kuo said.
“The software was for the exclusive use of the client, not for all of Cathay Securities’ clients,” she said.
Concord Securities and SinoPac Securities were also found to have allowed external information technology vendors to monitor their servers via remote connections, and both firms failed to keep the records of their clients’ transactions, Kuo said.
Cathay, Concord and SinoPac, which in January had market shares of 2.92, 0.93 and 4.46 percent respectively, would be barred from setting up new units, conducting capital injections, issuing corporate bonds or issuing new exchange-traded securities for the next three months, she said.
MasterLink Securities Co (元富證券) was fined NT$720,000, as it failed to install a firewall and allowed external companies to manage its server via remote connections, Kuo said, adding that its fine was lower as the company had kept transaction records.
Fubon Securities Co (富邦證券) and JihSun Securities Co (日盛證券) were fined NT$240,000 apiece for failing to install a firewall, while Hua Nan Securities Co (華南永昌證券), Capital Securities Corp (群益金鼎證券), KGI Securities Ltd (凱基證券) and Yuanta Securities Co (元大證券) were ordered to improve a few problems, the commission added.
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