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Why capital market firms need strong financial services cybersecurity

Security spending is globally outpacing IT spending for numerous reasons, including the growing trend of digital transformation within firms, the increasing volume of cyber threats, and evolving regulations on security, risk, and data privacy. To meet the demanding security requirements of the financial services industry, capital markets firms must implement a best-in-class approach to secure and protect client data.

 

Many firms have turned to financial services cybersecurity software to protect data from both external and internal threats, including malware, ransomware, password attacks, internal fraud, and corporate “bad actors.” Although baseline risks come with managing and storing sensitive data within capital market software, firms can take numerous precautions to establish and maintain a high level of cybersecurity. Learn how capital market firms, investment banks, and other risk-averse firms can select technology partners that meet or exceed security and compliance standards.

 

Cybersecurity Trends In 2021

Due to the rapid growth of threat vectors in enterprise networks, financial services cybersecurity risk has increased exponentially. A recent study from the Center for Strategic & International Studies (CSIS) estimates the current cost of cybercrime to be more than $600 billion. Cybercrime poses a major risk for capital markets firms, especially given that more and more firms are investing in information technology as well as mobile and digital applications. Firms that fail to properly address cyberattacks can face financial penalties and will undoubtedly suffer — both in terms of their reputations as well as their operational and financial performances.

 

Capital markets firms are investing in data security more heavily than ever before; experts predict global spending on information security to reach $170 billion in 2022. Many firms deploy their data using providers such as Microsoft Azure Cloud, which offers capital markets firms access to industry best practices and state-of-the-art cloud technology including multi layered security controls and real-time global cybersecurity intelligence across physical data centers and infrastructures. By building on the significant protection offered by providers such as Microsoft Azure, capital markets firms can develop a cybersecurity model that provides end-to-end security for their clients.

 

The Importance of Cybersecurity in Capital Markets

According to a study published by the International Organization of Securities Commissions (IOSCO) research department and the World Federation of Exchanges, around half of the world’s securities exchanges were the subject of cyberattacks last year. As a result, many capital markets firms are rushing to implement cybersecurity software for financial services to ensure their sensitive client and market data doesn’t become compromised.

 

Many cybersecurity providers use an in-depth defense strategy for protecting client data. This strategy creates a series of concentric defense rings around client data to maximize protection against all threats. The defense rings can include:

  • Physical data center security — Data can be hosted by providers such as Microsoft Azure where access is strictly controlled at the data center facility perimeter, physical buildings, and data center floor. Best practices require data centers to comply with key industry standards, including ISO/IEC 27001:2013, NIST SP 800-53, and CSA STAR.
  • Perimeter firewalls — Within the data center, the infrastructure is protected by a network firewall. Additionally, cyber intelligence — which the cybersecurity provider continuously collects across all its services and data centers — provides protection against various attack vectors such as DDoS.
  • VM and computer-level security — Many cybersecurity technologies deploy endpoint protection with host-based intrusion prevention on all virtual machines in its production environment. This protects against known viruses, worms, trojans, spyware, bots, rootkits, and other various intrusions. The intrusion prevention system uses machine learning to analyze traffic hitting the host, and blocks and alerts users to any abnormalities.
  • Secure application connectivity — Networks are monitored so that only desired traffic is allowed into the firm’s environment.
  • Data encryption —Both at-rest and in-motion data is protected using encryption. Data at rest is encrypted and decrypted transparently using 256-bit AES encryption — one of the strongest block ciphers available — and is FIPS 140-2 compliant. Data in motion is transmitted via HTTPS and encrypted using TLS with SSH-256 (2,048-bit key).

 

Best-In-Class Protection Against Cyberthreats

Capital markets firms must recognize the importance of cybersecurity and invest in capital market software to protect their own information and that of their clients. DealCloud employs a broad range of financial services cybersecurity measures and best practices to keep all client data — and the platform itself — secure by design. Through a structurally sound framework, tested annually to the highest standards of security, DealCloud aims to provide a highly functional and trusted solution that can both defend against and react to the myriad cyberthreats firms may face.

 

To learn more about how capital markets firms can implement best-in-class cybersecurity practices, contact us today.

 

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