China publishes rules to boost data security in money brokering

SHANGHAI (Reuters) – China published rules on Wednesday aimed at boosting data security in the money brokering industry, five months after a disruption in data services caused two days of chaos in the country’s $21 trillion bond market.

Five financial watchdogs, including the central bank as well as forex and securities regulators, urged interdealer brokers to improve data and risk management, and safeguard data security.

Interdealer brokers, when offering data services, “must not endanger national security, financial safety and public interest,” the regulators said in a joint statement.

The regulators also published a list of over 70 institutions to which money brokers can provide data services. These institutions include China Foreign Exchange Trade System, Shanghai Stock Exchange, Wind Information Co Ltd, Refinitiv Information Services (China) Co Ltd, and Bloomberg L.P..

Refinitiv, formerly a division of Thomson Reuters, is now part of the London Stock Exchange Group (LSEG). LSEG pays Thomson Reuters for news it distributes on Refinitiv terminals. Thomson Reuters, which owns Reuters News, holds a minority stake in LSEG.

Chinese regulators in March suspended the data feed business of money brokers, citing data security concerns, triggering a slump in bond trading turnover as many traders lost immediate access to real-time data. The chaos ended after China allowed business resumption.

China has in recent years grown more concerned over data security and rolled out new laws and compliance requirements for companies.

Money brokers act as middlemen between dealers. Interdealer brokers in China include the joint ventures of Tullett Prebon, NEX International Ltd, BGC Partners, Central Tanshi and Compagnie Financiere Tradition.

Such brokers can provide price quotation data to the market after exchange authorisation, but must protect client privacy, Chinese regulators said on Wednesday.

Brokers must tighten scrutiny over traders’ qualifications, and submit relevant business data to regulators, according to the rules.

The National Administration of Financial Regulation and the Cyberspace Administration of China are also among the agencies that published the rules.

(This story has been corrected to rectify the description of institutions in paragraph 4)

(Reporting by Shanghai newsroom; Editing by Jacqueline Wong; Editing by Muralikumar Anantharaman and Mark Potter)