2nd UPDATE: Hong Kong Exchanges Battles Hackers Of News Website For Second Day

The operator of Hong Kong's stock exchange on Thursday continued to battle a cyber-attack against its corporate filings website, a breach that has prompted the city's sole exchange operator to reconsider the way it disseminates information to investors.

HKEx Chief Executive Charles Li Thursday told reporters the "coordinated, sustained hacking attack" that at times made issuers' regulatory filings inaccessible persevered for a second day, but that HKEx had last night successfully implemented a filter mechanism to fend off attacks. For the most part the news website appeared to be functioning normally Thursday.

Li said the exchange plans to launch temporary measures beginning Friday that will broaden the distribution methods for listed companies' regulatory filings and that over the long-term, the stock exchange will work with the city's securities regulator and others to "explore the feasibility of an enhanced distribution model" for corporate filings beyond HKEx's news website.

Li said HKEx still doesn't know who the hackers are or what their motivation is.

HKEx Chairman Ronald Arculli brushed off fears Thursday that the hacking was an attempt to get access to price-sensitive information that could be used to profit from trades on the exchange. "That doesn't hold," he told Dow Jones Newswires.

The nature of the incident -- which involved the site being bombarded with traffic, knocking it offline in what is known as a "distributed denial-of-service" attack-- isn't consistent with such a plan, he said.

Companies such as PayPal and MasterCard, as well as government sites including the U.S. Central Intelligence Agency, have been victims of such attacks, which are executed by hackers who use a master computer to take over others using the internet. The "zombie machines" then flood their target with so many requests to view a page that the site can't respond to real visitors.

The attack, which comes amid heightened global concern over online hacking, has raised questions over the preparedness of Hong Kong's bourse, the key international exchange for trading Chinese companies. Some market participants have criticized the city's monopoly exchange operator for its general lack of technological prowess.

"HKEx is currently undertaking a decade of IT investment over the next few years," said Credit Suisse's Arjan van Veen. "Singapore has a 1.5 to two year lead on them in terms of IT investment in areas such as upgrading trading platforms and data centers," said the analyst, who covers HKEx and Singapore Exchange Ltd. (S68.SG).

The exchange operator has said its trading systems weren't breached by the hacking.

Li called the exchange operator's decision to halt trade in seven listed companies because of the website failure a "painful" one. But he and Arculli defended the move, which they said was necessary to ensure all investors have equal access to corporate filings.

"It was a good call to suspend the trade of the companies that had issued price-sensitive information," said shareholder activist and former HKEx director David Webb. "If they'd carried on without everyone having access to the announcements it would have been unfair."

Companies that were suspended from trade Wednesday included blue chips HKEx, Cathay Pacific Airways Ltd. (0293.HK) and banking giant HSBC Holdings PLC (HBC). The three, together, account for around 18% of the benchmark Hang Seng Index's weighting.

-By Kate O'Keeffe, Dow Jones Newswires; 852-2802-7002; [e-mail]