China's Banking Regulatory Commission (BRC) intends to hold a bank's board of directors, supervisory committee and top management responsible for any breakdowns in its trading and payment system.

BRC Chairman Liu Mingkang has urged indigenous banks to "attach great importance" to IT risks as the security, reliability and efficiency of information technology have a direct bearing on the stability of the financial industry.

He said early this month that in April, the inter-bank trading system of China Unionpay, the country's only national electronic payment network operator, broke down for six hours, paralyzing most of the country's automatic teller machines and Point of Sales equipment in shops.

About 2.46 million trades involving an aggregate turnover of 128.77 billion yuan were blocked.

Describing the losses as "huge", Liu said bank management must be fully aware that warding off trading and payment system risks was not the concern of only one bank.

"Given the omnipresence of information technology, a breakdown in one area could lead to a domino effect across the entire sector," he warned.

The chairman ordered that a special unit be set up to evaluate risk, and upgrade and maintain information technology facilities.

Boards of directors and supervisory committees must preach the strategic importance of limiting information technology risks and prod bank management to establish a sound risk prevention and management mechanism, he said.

In an effort to distinguish information technology risks from traditional credit and market risks, the commission has threatened to punish the boards of directors, supervisory committees and top bank management in the event of a trading system glitch.

Source: Xinhua