Rebooting the Carbon Spot Market

Victims of the infostealer.Nimkey Trojan virus might have provided hackers with the necessary digital certificates and private electronic keys that temporarily shut down the spot carbon trading market in Europe this week.
After a rash of hacks of several national registries, including those in Austria, the Czech Republic, Germany and Romania, Commission officials estimate that about 2 million European Union allowances (EUAs), or 0.02 percent of EUAs in circulation, had been illegally transferred.
As a result, the Commission shut down the spot carbon trading market by preventing external or internal transfers of EUAs. Futures-based trading of EUAs, which represents about 80 percent of the carbon trading market, remains unaffected.
In the meantime, the Commission is in discussions with various national registries on how to improve security and set new standards. Once the national registries meet the new agreed security standards, they will be allowed to resume EUA transfers.
I doubt that the writers of Nimkey actually planned to shut down the carbon spot market. It's more likely that they went through their treasure trove of collected private keys and certificates and realized they had access to the various national registries—it was a crime of opportunity rather than a premeditated one.
However, it should be an object lesson for the rest of the markets when it comes to maintaining security of their networks. While digital certificates provide a decent level of security, Nimkey demonstrates their weakness. I would not be surprised if the Commission insists on not only password- and certificate-based security in the future, but on some token-based offering as well.
The major question now is whether to build the new systems themselves or move to an existing financial intranet that already provides that level of security and the clock is ticking. The longer the spot market remains closed, the more costly it will be to the industry. Yet, important decisions made in haste tend to be more expensive. I do not envy the Commission on this decision.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
Market data woes, new and improved partnerships, acquisitions, and more
The Waters Cooler: BNY and OpenAI hold hands, FactSet partners with Interop.io, and trading technology gets more complicated in this week’s news round-up.
Asset manager Fortlake turns to AI data mapping for derivatives reporting
The firm also intends to streamline the data it sends to its administrator and establish a centralized database with the help of Fait Solutions.
The murky future of buying or building trading technology
Waters Wrap: It’s obvious the buy-v-build debate is changing as AI gets more complex, but Anthony wonders how trading firms will keep up.
FactSet lays out trading roadmap post LiquidityBook deal
The software and data provider announced it was buying LiquidityBook this month, filling a gap in its front-office suite of solutions.
BlackRock tests ‘quantum cognition’ AI for high-yield bond picks
The proof of concept uses the Qognitive machine learning model to find liquid substitutes for hard-to-trade securities.
The future of trading takes shape
The future of trading across the capital markets and the drivers likely to shape the ever-evolving industry
On GenAI, Citi moves from firm-wide ban to internal roll-out
The bank adopted three specific inward-facing use cases with a unified framework behind them.
FactSet-LiquidityBook: The buy-side OMS space continues to shrink
Waters Wrap: Anthony spoke with buy-side firms and industry experts to get a feel for how the market is reacting to this latest tie-up.