HONG KONG — China’s proposed cybersecurity rules for financial firms could pose risks to operations of western companies by making their data vulnerable to hacking, among other things, a leading lobby group has said in a letter seen by Reuters.
The latest regulatory proposal comes at a time when a string of western investment banks and asset managers are expanding their presence in China, either by setting up wholly-owned units or by taking a bigger share in existing joint ventures.
The China Securities Regulatory Commission (CSRC) released the draft Administrative Measures for the Management of Network Security in the Securities and Futures Industry on April 29, and offered a month-long public consultation on the proposals.
The draft rules seek to make it mandatory for investment banks, asset managers, and futures companies with operations in China to share data with CSRC, allow regulator-led testing, and help set up a centralized data backup center.
Morgan Stanley and HSBC are among those who have benefited in recent months from China’s opening up of financial sector for foreigners, following Goldman Sachs and JPMorgan, which won nods to run local units last year.
Lobby group, the Asia Securities Industry and Financial Markets Association (ASIFMA), in a letter addressed to the CSRC and dated May 27, expressed concerns of its members about the draft rules as they anticipate risks in sharing sensitive data.
The letter’s content, which has been reviewed by Reuters, has not been reported before.
ASIFMA, which has more than 160 members comprising leading financial institutions from both the buy and sell side, banks,…
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