On November 14, 2019, the Investment Industry Regulatory Organization Of Canada (IIROC) announced amendments to their Dealer Member Rules that require that all investment dealers that are subject to their regulations are now obligated to report all cybersecurity incidents to IIROC within three (3) days of its discovery, as well as provide IIROC with an incident investigation report within thirty (30) days of discovery.

This announcement could be seen as the conclusion to a process that began nearly two (2) years ago in March of 2018, when IIROC issued notice 18-0063, which spoke of the growing risk to investment professionals of cybersecurity attacks and suggested best practice cybersecurity measures for members to follow via their Cybersecurity Best Practices Guide and Cyber Incident Management Planning Guide.

From the document notice 18-0063:

Reporting of cybersecurity incidents Cyberattacks have been increasing in number and sophistication. In particular, there is a general increase in ransomware attacks, likely due to the ‘commoditization’ of tools making it easier for less sophisticated attackers to use them. The active management of cyber risk is critical to the stability of IIROC Dealer Members (Dealers), the integrity of capital markets and the protection of investors. Over the past few years, we have committed to helping Dealers strengthen their risk-management practices and increase their cybersecurity preparedness. To further strengthen and support Dealers in the management of cyber risks, we will soon be publishing for comment proposed amendments to our Dealer Member Rules, requiring mandatory reporting of certain cybersecurity incidents. In the interim, we ask all Dealers to promptly report to us the occurrence of any cybersecurity incident.

According to IIROC’s Dealer Member Rules a cybersecurity incident is defined as “any act to gain unauthorized access to, disrupt or misuse a Dealer Member’s information system, or information stored on such information system, that has resulted in, or has a reasonable likelihood of resulting in:

1. substantial harm to any person
2. a material impact on any part of the normal operations of the Dealer Member,
3. invoking the Dealer Member’s business continuity plan or disaster recovery plan, or
4. the Dealer Member being required under any applicable laws to provide notice to any government body, securities regulatory authority or other self-regulatory organization.”

With cyberattacks and data breaches becoming an everyday occurrence and affecting more businesses and consumers, the timing for this is probably fortuitous. In the summer of 2019 for example, Capitol One was the victim of a cyberattack that compromised the financial and personal information of more than 100 million people. With purveyors of ransomware and malware becoming ever more sophisticated, and with more and more information being linked and shared across partner networks, it is no longer impossible to imagine a scenario which starts with one financial institution incurring a breach and then the attack spreads outwards to include its external partners as well as their partner’s partners.

The IIROC’s own research data suggests that its members have been getting the message prior to this announcement and have been busily revamping their own individual security practices. A survey they conducted in late 2018 had 82% of the firms surveyed saying that they had been conducting cybersecurity training once a year, compared to only 56% of those surveyed in 2016. 72% had an Incidence Response Plan, up from 53% in 2016. 94% reported that they now assessed 3rd parties for cyber risks before entering into a contract, compared to 70% in 2016. And more than 1/2 had purchased some sort of cyber insurance policy compared to 37% in 2016.

These new requirements are mandatory and will take effect immediately.

About Datatel and Secured Net Solutions

Organizations are in a continuous struggle to ensure that all necessary safeguards are in place to protect their valuable information from external and internal security threats alike. At Datatel, it is our goal to ensure that our clients are prepared to successfully navigate the ever-changing Cybersecurity and payment security landscape. In partnership with Secured Net Solutions we provide our customers with tailor made services and solutions that ensure that they will always be prepared for and able to respond to information security threats.

Our team’s depth of expertise and breadth of capability in advanced technology is founded upon real-world experience, combined with solid technical training and continuous skill development. Our philosophy and core business align directly with the critical components required to assist our clients in establishing a more secure infrastructure and overall security posture.

For information on how we can help you addressing your Cybersecurity and Payment Security needs contact us at: 800-831-6660 x 257 or Click Here