Cyber Attack on Capital Market’s Data Center

Kathmandu , A serious issue has once again emerged in Nepal's capital market infrastructure. A ransomware (cyber) attack hit Data Hub Pvt. Ltd., where the Trade Management System (TMS) and servers of 72 broker companies are hosted. Following the cyber attack on Data Hub, Nepal Stock Exchange (NEPSE) had to completely suspend regular stock trading on Monday. The country's sole stock market, which has become fully dependent on electronic systems, had to be shut down entirely due to the technical problem that arose at the data center.

Data Hub Pvt. Ltd., located at Shikhar Biz Center in Thapathali, provides server and TMS hosting services to broker companies. According to Data Hub, a ransomware attack on its TMS hosting infrastructure was confirmed on the morning of Ashwin 4 at around 5:30 AM. Ransomware is a type of deadly malware that locks and takes control of systems and data, demanding money for regaining access.

Although attackers attempted to take control of the data, it is claimed that no data has been stolen or damaged so far. "The most recent backup of the entire infrastructure prior to the incident was taken on Ashwin 4 at 4:00 AM, and we have secured and isolated that backup," Data Hub stated.

Data Hub informed Yco Pvt. Ltd., the TMS developer company, about the cyber attack via written correspondence. Since the brokers' systems are directly linked to NEPSE's main trading system, there was a high risk that the malware could spread to NEPSE's system as well.

NEPSE stated that trading was halted because the technical issue that surfaced at the data center on Sunday morning remained unresolved. According to NEPSE, operating under the status quo could potentially damage the trading system itself, which led to the decision to suspend trading. TMS was developed by Yco Private Limited. "In light of the application for suspension submitted by the Stock Brokers Association of Nepal as well, this notice is issued to inform all concerned that trading has been suspended in accordance with Rule 21 (1) of the Securities Listing and Trading Regulations, 2075," the notice states. Prior to this, the Stock Brokers Association of Nepal had also submitted an application to NEPSE requesting the suspension of Monday's regular trading session.

According to Data Hub, the entire latest backup taken at 4:00 AM on Ashwin 4—about an hour and a half before the attack—was kept secure and isolated, thereby saving the main data. The company stated that high precautions have been taken to prevent the malware from spreading to other networks, given that the TMS system is directly connected to NEPSE and other financial systems.

Although the system has been completely cleaned, forensic investigations are underway to confirm whether it is 100 percent secure before bringing it back online. NEPSE stated that risks will remain if the market is reopened before forensic checks and corrective measures are completed.

Investors Outraged by Sudden Market Closure

Investors have grown outraged as the capital market, which comprises around 8 million investors and a market capitalization of nearly 4.5 trillion rupees, came to a sudden halt. Investors who make buy and sell plans based on minute-by-minute price fluctuations became furious when the market was closed without prior notice. NEPSE apologized for the trading suspension. NEPSE's notice did not clarify exactly how long it would take to resolve the issue or whether the upcoming trading session (Tuesday) would be affected. Investors have repeatedly highlighted the need for a new stock exchange to foster competition and bring in safe, modern, and world-class technology. Niranjay Ghimire, spokesperson for the Securities Board of Nepal, said that efforts to consult and study the incident with relevant parties are underway.

Along with the expansion of online trading in Nepal's capital market, reliance on technology has grown rapidly. However, Monday's incident has brought back to the surface questions about how effective alternative systems and 'disaster recovery' structures—which can be brought into operation immediately when main systems face issues—actually are in practice. Currently, the size of Nepal's capital market stands at 4.553 trillion rupees.