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The futures market is still reeling from the aftermath of the cyber attack on Ion Markets

The futures market is still reeling from the aftermath of the cyber attack on Ion Markets

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Business in global derivatives trading has yet to return to normal three weeks after a cyberattack on Ion Markets, underscoring the fintech’s significant role in installing the $1 trillion market.

The little-known Ion was targeted by attackers in late January, who disabled part of its derivatives systems and forced many trading desks to manually track their data in spreadsheets.

According to a person familiar with the matter, the Dublin-based company is aiming to restore normal business operations and transition all customers to clean systems this week. Ion declined to comment.

The disruption has rocked the global futures market, which has relied on automated software from companies like Ion to process trades since noisy, paper-strewn trading pits gave way to electronic systems.

Ion is one of the few companies that handles the complex but critical task of matching and reconciling brokerage deals.

The hack has left exchange and market regulators unable to generate weekly reports on derivatives trading activity and seek workarounds to log their day-to-day activities in one of the world’s largest financial markets. According to data from the Futures Industry Association, just over $1 trillion in stock, commodity and interest rate futures were open in December.

“This was a high-profile attack,” said John Rapa, chief executive of derivatives industry consultancy Tellefsen. “This is a large, critical vendor that many business participants use.”

As Ion upgrades its software to new hardware and customers transition to clean systems, the three-week delay has caused trading firms and regulators to pay more attention to the risks to day-to-day trading operations from a single point of failure.

Founded in 1999, Ion has built an empire by acquiring dozens of specialized trading technology groups through a series of leveraged buyouts. Its founder and CEO, Andrea Pignataro, a former bond trader at Salomon Brothers, avoids the limelight.

On Jan. 31, Ion confirmed market rumors that it had suffered a cyberattack on a part of its business that matches futures trades and calculates margins – the insurance that backs a derivatives trade – according to people familiar with the matter.

“It made things a lot more manual. . . check everything line by line,” says a person familiar with the situation.

RBC, UBS and Macquarie were among the companies involved, according to people familiar with the matter. RBC declined to comment. UBS and Macquarie did not respond to requests for comment.

“The impact is huge because the recovery time isn’t typically fast,” said Martin Greenfield, CEO of cybersecurity firm Quod Orbis. “In most banking terms, that’s a complete nightmare scenario,” he said, adding that “the whole supply chain and third-party risk element is quite difficult to manage.”

The disruption has also impacted regulators. The Commodity Futures Trading Commission, the main US derivatives regulator, has been unable to release its weekly Commitments of Traders Report, which shows the contracts that customers have been buying and selling. While it is expected to resume on Friday, the report will be three weeks behind.

The Atlanta-based Intercontinental Exchange was unable to produce its weekly futures positions report as required by European regulations. European exchange operator Euronext has resumed the release of its weekly commodity derivatives report, but is also behind.

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