Financial Industry Group Publishes Recommendations to Guide Development of Cybersecurity Regulations

 The Securities Industry and Financial Markets Association [SIFMA] is proposing the formation of a working group of government agenies to review cybersecurity guidance and regulations related to the financial industry.

The proposal was mentioned in a new document entitled ‘Principles for Effective Cybersecurity Regulatory Guidance’ published today by SIFMA. In the paper, SIFMA lays out ten foundational principles to serve as a framework for regulators to develop plans to review, update and “harmonize” cybersecurity policies, regulations and guidance. 

According to the association, the goal is to promote a collaborative approach to cybersecurity that can foster innovation and strengthen efforts to protect the financial sector.

“Cybersecurity is a top priority for the financial services industry, which is dedicating significant resources to protect the integrity of the markets and the millions of Americans who use financial services every day,” said Kenneth E. Bentsen Jr., SIFMA president and CEO, in a statement. “Effective and consistent regulatory guidance is a critical component of the broader cyber defense effort, as it promotes best practices and accountability across the financial sector.”

“SIFMA suggests that an inter-agency harmonization working group may be useful to coordinate review of cybersecurity regulations and guidance and receive private sector input,” the association noted in the report. “The Office of Management and Budget (OMB) could facilitate this working group with White House approval to ensure that different agencies are talking to each other (including of course independent agenciesand SROs), avoid unnecessary overlap, and build a coordinated response to improve cybersecurity. Another essential component to harmonization and consistency is ensuring that any domestic requirements are consistent with international legal obligations.”

SIFMA’s ten principles are:

• Principle 1:     The U.S. Government Has a Significant Role and Responsibility in Protecting the Business Community
• Principle 2:     Recognize the Value of Public-Private Collaboration in the Development of Agency Guidance
• Principle 3:     Compliance with Cybersecurity Agency Guidance Must be Flexible, Scalable and Practical
• Principle 4:     Financial Services Cybersecurity Guidance Should be Harmonized Across Agencies
• Principle 5:     Agency Guidance Must Consider the Resources of the Firm
• Principle 6:     Effective Cybersecurity Guidance is Risk-Based and Threat-Informed
• Principle 7:     Financial Regulators Should Engage in Risk-Based, Value-Added Audits Instead of Checklist Reviews
• Principle 8:     Crisis Response is an Essential Component to an Effective Cybersecurity Program
• Principle 9:     Information Sharing is Foundational to Protection, Must Be Limited to Cybersecurity Purposes, and Must Respect Firms’ Confidences
• Principle 10:   The Management of Cybersecurity at Critical Third Parties is Essential for Firms

“Cyber attacks are increasing in frequency and sophistication, and it is critical that the industry and government collaborate to mitigate these threats,” said Bentsen. “We appreciate that the public sector has embraced this partnership and we will continue to offer our insights to help them in their work.”

The paper can be read here.