Latest SEC Proposals Underscore Importance of Cybersecurity

The pandemic changed the way businesses delivered goods and services with a heavier reliance on the internet. The latest proposals by the Securities and Exchange Commission (SEC) underscore the importance of cybersecurity.

The latest proposals by the SEC will affect financial advisors directly, according to a Financial Advisor article.

“The Securities and Exchange Commission approved three proposals today that will directly impact financial advisors—a proposal to require advisors to private funds to provide full cost and performance disclosures to clients, a sweeping proposal that outlines advisors’ cybersecurity duties and last but not least, a proposal to accelerate the securities settlement cycle from two days to one,” the article reports.

Of particular importance is the emphasis on cybersecurity. With a rise in cloud computing, more client-related files are now being uploaded to a central server that’s accessible online, which could make them prone to hacking.

“On the cybersecurity front, the agency proposed a rule that would require both advisors and funds to implement written cybersecurity policies and procedures designed to address cybersecurity risks that could harm advisory clients and fund investors,” the article says. “The proposed rule would also require advisors to report significant cybersecurity incidents affecting the advisor or its fund or private fund clients to the SEC using a new confidential form.”

A Cybersecurity ETF Opportunity

With a rise in cybersecurity attacks and companies looking to grow their budgets for cybersecurity, one ETF worth looking at is the Global X Cybersecurity ETF (BUG). The fund seeks to provide investment results that generally correspond to the price and yield performance, before fees and expenses, of the Indxx Cybersecurity Index, which is designed to provide exposure to exchange-listed companies that are positioned to benefit from increased adoption of cybersecurity technology.

BUG gives investors:

  • High growth potential: Forecasts suggest the global cybersecurity market could grow from nearly $180 billion in 2021 to more than $370 billion by 2028.
  • Long-term, global challenge: Cybersecurity is a persistent global concern, affecting both public and private sector entities seeking to protect against the increased risk of ransomware attacks and other online threats.
  • Unconstrained approach: The realm of cybersecurity extends far beyond personal computers, reaching an ever-multiplying number of devices and applications. BUG invests accordingly, cutting across traditional sector and geographic definitions. In a single trade, BUG delivers access to dozens of companies with high exposure to the cybersecurity theme.

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