Derivative Trading Halted On HKEX Following Hack And Unrelated Software Issue

Hong Kong Exchanges and Clearing Limited
The name of Hong Kong Exchanges and Clearing Limited is displayed at the entrance in Hong Kong (Photo: Reuters / Bobby Yip)

The public website of the Hong Kong Exchanges and Clearing Limited (HKEX) was hacked on Friday last week. Around the same time, the exchange also stopped all derivatives trading, reportedly to fix an unrelated bug within its systems.

The combination of the technical issues resulted in several outages during the day, causing increased concerns amongst investors in Asia's third-largest equities marketplace.

The attack and the apparent separate software issue caused a backlog of transactions and blocked access to the company's online data.

According to HKEX, its open-access website was hit with a denial-of-service attack (DDoS) causing major problems. The hackers flooded the website with massive simulated incoming traffic. This caused the website to significantly slow down and ultimately blocked access to regular visitors.

The DDoS attack disabled the website's ability to display vital data in real-time, including trading information such as currency exchange prices and equities data. Around the same time, HKEX announced that it was dealing with a software issue involving its derivative financial products.

The bourse's chief executive officer, Charles Li Xiaojia, mentioned that the company was forced to halt all derivative transactions because of the software issue. Trading of futures and options were unavailable throughout the afternoon on Friday.

Several brokers had complained that they were not able to enter new orders on the exchange's trading platform.

The halted trades involved buy and sell contracts for futures and options from underlying indexes and assets. More than 60,070 trades were made prior to the suspension.

The bourse's technical team worked to immediately fix the issue over the weekend. Trading was then brought back online after technicians managed to upload an older version of the software without the glitch.

Shortly after the outage was fixed, Li mentioned in a press conference that the bourse will be making additional investments to ensure that the same problem does not occur again. The exchange pledged to greatly enhance its information and technical infrastructure to hopefully regain the public's confidence in its systems.

The HKEX was last attacked by hackers back in August of 2011. The company's website was hit with a similar DDoS attack.

The difference was that the previous attack actually brought down the company's stock trading systems, halting trade on stocks worth around $190 billion. Trading on major stocks such as HSBC Holdings and Cathay Pacific were severely affected.

Following the 2011 attack, the HKEX allotted around $260 billion to bolster its information technology and trading systems.  The perpetrator of the 2011 attack was later identified, arrested, and sent to jail. 

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