Nepal’s stock market was shut on Monday after a ransomware attack at a data centre disrupted the trading systems of 72 brokerage firms, prompting regulators to halt trading to prevent further damage.

The Nepal Stock Exchange (Nepse), suspended trading at the request of the Stock Brokers’ Association of Nepal after DataHub Pvt Ltd, which hosts the brokers’ data systems, reported a cyber attack early Sunday.

The 72 brokers using the data centre were unable to operate their systems, according to Nepse. The exchange said the brokers had formally requested that trading be halted after the technical problem at the data centre remained unresolved.

The incident has also raised concerns about the wider exposure of Nepal’s capital market to a single point of failure.

The data centre was hacked at around 4am on Sunday, according to brokers. More than 24 hours later, its operators had yet to determine the full extent of the problem.

“Based on official information received from our data centre, DataHub Pvt Ltd, the ongoing ransomware attack has affected multiple systems and services, including TMS, CDSC-related systems, payment gateways and other interconnected services,” YCO Pvt Ltd, which manages the brokers’ trading systems, said in a letter to the Stock Brokers’ Association.

The affected systems have been isolated as a precaution, YCO said.

Because the data centre is connected to Nepse’s network, the incident could pose cybersecurity, operational and data-theft risks to the exchange’s trading system, the company said.

“With the affected systems currently isolated and the actual impact and scope of the incident still being assessed, continuing the trading session under the circumstances could create additional risks,” YCO said.

Sagar Dhakal, president of the Stock Brokers’ Association, said the association asked NEPSE to suspend trading after YCO relayed the information it had received from DataHub.

“The data centre used by 72 brokers has been affected, so their systems are also not functioning,” Dhakal said. “We asked Nepse to halt trading today to minimise the risk of further damage.”

Nepse issued its suspension notice early Monday, saying the technical problem at DataHub had not been resolved and that continuing trading could potentially damage the exchange’s own trading system.

The outage has prompted questions among investors and market analysts about the resilience of Nepal’s trading infrastructure and the safeguards around investor data.

Subas Chandra Dhungana, an investor and market analyst, said authorities needed to take such disruptions more seriously and ensure that the market has contingency arrangements when critical infrastructure fails.

He pointed to the Tokyo Stock Exchange, where a technical failure on October 1, 2020, halted trading for the entire day, affecting more than 3,500 listed companies. Following an investigation by Japan’s Financial Services Agency, TSE President and CEO Koichiro Miyahara resigned, while other senior executives faced pay cuts.

Dhungana said Nepal’s brokerage industry remains heavily dependent on the trading systems and servers provided through the country’s market infrastructure, leaving limited alternatives when a critical system goes down.

“There should be alternative arrangements when such problems occur,” he said. “This is especially important when Nepal is planning to introduce internationally compatible technologies and tools into the capital market.”

The incident has also exposed questions over how securely traders’ and investors’ data are stored and protected, Dhungana said.

Nepse has not said whether trading will resume on Tuesday.