SIFMA makes client-data safety a top priority

The Securities Industry and Financial Markets Association in 2018 will have a new focus on making client data safe and secure, according to Lisa Hunt, who is SIFMA’s chair as well as executive vice president for international services and special business development at Charles Schwab & Co.

“We also know data has never been more prevalent, and frankly never more important to our businesses as we work to serve our clients, but it’s also never been more at risk,” said Ms. Hunt, who made her comments Tuesday morning in New York at a year-end briefing with reporters about the industry trade group for brokerage firms and Wall Street investment banks. “Our ability to capture data has never been easier but our responsibility to protect that data has never been more important.”

“One of the top priorities for SIFMA in 2018 will be doing just that,” she said. “We need to insure as an industry that our clients’ data is protected and safe at every turn. We can’t make things better for our clients, we can’t make things easier for our clients, if we make them more vulnerable.”

(More: Protecting client data at advice firms.)

The securities industry is working together to ensure client data is protected, she said, adding that SIFMA is close to finalizing four principles as an industry standard.

“These principles should apply equally to all of our members and others in fintech when it comes to data aggregation,” Ms. Hunt said. “Those four principles are around: access; security and responsibility; transparency and permission; and a clear scope of use and access.”

“As we continue to grow this digital economy, it has never been more apparent that the most important currency our clients have is their personal information,” she said. “As an industry, we have a responsibility and obligation to protect it.”

(More: SIFMA: State-level fiduciary rules would confuse investors.)

Meanwhile, SIFMA said it’s hopeful that regulators will soften their stance on how investor data is collected for the Securities and Exchange Commission’s far-reaching new market-surveillance system.

The SEC may agree to allow broker-dealers to submit client-trading information without revealing personal identifiers attached to each individual investor as the industry is requesting, SIFMA President Kenneth Bentsen told reporters.

The industry, along with stock and options exchanges, has resisted the SEC’s Consolidated Audit Trail surveillance system — dubbed CAT — in its current form, arguing that it raised cybersecurity issues. SIFMA supports the concept of the surveillance system while opposing the inclusion of detailed investor data in it, Mr. Bentsen said.

One possible solution would be the use of unique identifiers for the data being gathered. That would enable regulators the oversight they’re seeking without exposing sensitive information to potential breaches, Mr. Bentsen said.

The SEC had rejected requests to delay the start of the program, and data from the exchanges started flowing into CAT last month. Brokers have to begin submitting their client trading data in November 2018. Information collected from 23 different organizations and accessible by 3,000 people from across those organizations will render it vulnerable to breaches, Mr. Bentsen said, while noting that SEC Chairman Jay Clayton has signaled his agreement with those concerns.

“People are coming to realize that,” he said. “Based upon Chairman Clayton’s comments before the Senate and the House testimony, I think he understands this as well.”

Bloomberg News contributed to this story.

Related Topics: Charles Schwab & Co., Securities Industry And Financial Markets Association (SIFMA)