The Securities Exchange Commission (SEC) is hardening its stance on cybersecurity, which should help ETFs such as the Global X Cybersecurity ETF (BUG).
The SEC has already made some landmark moves that punish companies for not thoroughly establishing solid cybersecurity measures.
“This summer, the U.S. Securities and Exchange Commission (SEC) signaled a significant change in how it thinks about what constitutes a threat to companies: It now considers cyber vulnerabilities to be an existential business risk,” a Harvard Business Review article said. “This was evident in fines levied against two companies over inadequate disclosures of cybersecurity issues — British publishing company Pearson PLC and First American Financial Corp. In mid-August, the SEC announced that Pearson had agreed to pay $1 million to settle charges that it misled investors following a 2018 breach and theft of millions of student records.”
“And in June, the SEC announced another settlement $500,000 fine against real estate services company First American Financial for lack of disclosure controls following the discovery of a vulnerability in its system that exposed 800 million image files, including Social Security numbers and financial information,” the article added.
This should serve as a warning to other companies that they must ensure their own cybersecurity measures are sternly in place. As such, holdings of BUG could be in for a deluge of inquiries on companies looking to bolster their own cybersecurity.
Help From the Infrastructure Build-out
BUG is also getting help from the trillion-dollar infrastructure plan that is looking to build up cybersecurity. After successfully passing through the Senate, the bill faces an uphill battle as it is up for vote in the House of Representatives.
Nonetheless, as the federal government looks to build up digital infrastructure, it realizes that bolstering cybersecurity is imperative. The BUG fund seeks to provide investment results that generally correspond to the price and yield performance, before fees and expenses, of the Indxx Cybersecurity Index.
BUG gives investors:
- High growth potential: BUG enables investors to access high growth potential through companies that are positioned to benefit from the rising importance and increased adoption of cybersecurity technology.
- An unconstrained approach: The ETF’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
- ETF efficiency: In a single trade, BUG delivers access to dozens of companies with high exposure to the cybersecurity theme.
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