Bloomberg snooping scandal alerts China on data security

BEIJING - The recent snooping scandal involving global financial information and news provider Bloomberg LP has sounded an alarm for the Chinese financial industry and its heavy reliance on foreign data services.

Bloomberg LP announced on Friday the appointment of former IBM Chairman and Chief Executive Officer Samuel J. Palmisano as an independent adviser regarding privacy and data standards.

It was the company's latest move to placate client concerns after it acknowledged that Bloomberg reporters had long been able to access information on clients' use of Bloomberg's data terminals, including their login history and functions used.

As the US Federal Reserve and central banks in Europe and Japan have all reportedly started looking into the issue or contacted Bloomberg for information on the matter, China would also do well to stay vigilant about financial data safety.

"For a country like China that has such huge foreign exchange reserves, its forex investment portfolio has always been under the global spotlight," said financial commentator Yu Fenghui. "Any chance of China's investment intention being snooped on or leaked may cause huge market fluctuations or losses."

As of the end of the first quarter this year, China's foreign exchange reserves stood at a mammoth $3.44 trillion, the world's largest.

According to Yu, Chinese users of Bloomberg's data terminals include not only major commercial banks, securities firms, investment banks and fund management companies but also China's central bank and foreign exchange watchdog.

If information on those decision makers' use of Bloomberg terminals is gathered by Bloomberg journalists for analysis or leaked to a third party, it will bring huge risks for China's financial sector, warned Yu.