Lawmakers Quiz Exchanges On Cyber-Crime After Nasdaq Breach

Senior Republican lawmakers on Tuesday asked the largest U.S. financial exchanges for more details on how they are dealing with the threat of cyber-crime in the wake of repeated hacker incursions into Nasdaq OMX Group Inc. (NDAQ) computer systems.

The Nasdaq security breach has raised serious questions around the defenses of U.S. exchanges and clearinghouses at a time when investor confidence is already shaky, according to a letter sent to exchange executives from Rep. Spencer Bachus (R., Ala.) and Rep. Scott Garrett (R., N.J.).

"At a time when investor confidence remains fragile, the hacking of a network that contains non-public inside, material information that could be used illegally to gain a trading advantage is especially disconcerting," the lawmakers wrote.

Nasdaq OMX, parent of the Nasdaq Stock Exchange, on Saturday confirmed a report in The Wall Street Journal that its Directors Desk platform had been compromised on several occasions by hackers.

The platform is unconnected to Nasdaq's trading system, but the breaches have prompted probes from multiple government agencies. Nasdaq said it had been asked by investigators not to disclose the breaches until next week.

The letter from Bachus and Garrett follows separate correspondence sent to the Securities and Exchange Commission Monday by Sen. Robert Menendez (D., N.J.), asking that regulators re-examine disclosure policies when electronic security is broken at an exchange or other trading company.

Bachus, chairman of the House Financial Services Committee, and Garrett, chairman of the House Subcommittee on Capital Markets, addressed their letter Tuesday to the heads of Nasdaq OMX, NYSE Euronext (NYX), CME Group Inc. (CME), IntercontinentalExchange Inc. (ICE), CBOE Holdings Inc. (CBOE), the International Securities Exchange, Direct Edge and BATS Global Markets.

The chairmen of the SEC and Commodity Futures Trading Commission were also included, as well as the heads of the Depository Trust and Clearing Corp. and the Options Clearing Corp., which handle trade-clearing services for U.S. securities and options markets.

A spokesman for Nasdaq OMX declined comment on the Tuesday letter.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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