WASHINGTON, D.C. — Legislation introduced by U.S. Rep. Warren Davidson (R-Troy), “The Market Data Protection Act” H.R. 3973, cleared the House Financial Services Committee October 12 with a 59 to 1 vote and will next head to the House floor for a full vote.
This bipartisan bill directs the U.S. Securities and Exchange Commission (SEC) and others to accelerate cyber-security risk controls to prevent future hacker attacks.
“We need to make sure our house is in order at the SEC,” said Davidson. “We know there are serious flaws in the way the SEC maintains its data, and in the ways they respond to and communicate errors and omissions. These flaws undermine the trust and confidence of the customers the SEC regulates.
“The Equifax breach and the recent cyber-attack at the SEC only exacerbate the need to ensure top cyber-security controls are in place at our securities regulator which is why I look forward to this bill swiftly making its way to President Trump’s desk and being signed into law,” said Davidson.
In a recent cyber-attack at Equifax, 143 million people including 5 million people from Ohio had their personal data upended.
The Government Accountability Office (GAO) reports that deficiencies in the SEC computing environment may jeopardize the confidentiality, integrity, and availability of information residing in and processed by its systems. The Market Data Protection Act addresses these deficiencies by requiring the SEC to freeze reporting to the Consolidated Audit Trail (CAT) until proper protections are in place to secure personal information.
In a letter of support, David Bellaire, Executive Vice President and General Counsel of the Financial Services Institute wrote:
“On behalf of our members, FSI appreciates your time in considering support for H.R. 3973 the Market Data Protection Act of 2017. Cyber-attacks are steadily growing in terms of both frequency and sophistication. We thank you both as well as the Committee for the introduction of the H.R. 3973 Market Data Protection Act of 2017 in the 115th Congress, and we hope that both the Committee and the House as a whole will consider this sensible piece of legislation that will safeguard the storage of market data.”
The Market Data Protection Act of 2017 H.R. 3973 is supported by U.S. Rep. Brad Sherman (D-California). Other organizations supporting this bill are the Financial Services Institute and the U.S. Chamber of Commerce.
The Market Data Protection Act of 2017, H.R. 3973 would amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority, Inc. (FINRA) and the Consolidated Audit Trail (CAT) operator to develop internal risk controls to safeguard and govern market data stored by those entities, market data sharing agreements, and “academic research performed at [these entities] using market data.” The Act further: a) prohibits the CAT operator from accepting market data until these controls are developed, and b) relieves CAT participants from any requirement to provide market data, during the period in which the operator is prohibited from receiving it.