It's alarming when you read the report in The Wall Street Journal that hackers broke into the Nasdaq's computer network last weekend and that law enforcement agents are now investigating whether the information gleaned could be used for insider trading. Nasdaq says its trading systems were not targeted. It says the malware was pointed at its Directors Desk service, a web-based application where some 5,000 companies store documents for board members. At this stage, no one knows what the motives are. It could be anything from terrorism to wire fraud.
Phil Albinus at Advanced Trading says the potential for damage to the markets is just mind-blowing. "If you think about it, the mischief-makers might be out to destroy one company and favor another. Imagine if a major exchange that boasts near zero latency took 10 minutes to report a trade or a stock price? What if you could switch the price of, say, Google and Sears? It's not hard to imagine the havoc if Apple were to become a penny stock for an hour or an entire afternoon."
Of course, the implications of this extend well beyond stock markets. Dean Takahashi at Venture Beat makes the excellent point that "if hackers can penetrate Nasdaq, maybe they can break into the computer systems of other secure entities, from air traffic control systems to defense computers."
If nothing else, it tells us that security firms, exchanges and infrastructure better start beefing up their security. Otjherwise, we can expect more of these attacks.
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