SHANGHAIHONG KONG, June 27 Reuters China should allow crossborder sharing of information by financial firms operating in the country, a leading financial lobby group said, as authorities tighten control of data generated within its borders in a national security drive.

Last July, China unveiled crossborder data review measures that require a security review for important offshore data transfers a move that triggered confusion and concern among foreign financial firms operating in the country.

Foreign interest could be curbed if the country39;s data regulations remain vague or stringent, even as China continues to open up its capital markets, said Alice Law, CEO of the Asia Securities Industry Financial Markets Association ASIFMA.

You try to create a firewall, and then your own market becomes a data island itself, she said, adding foreign firms could go elsewhere or diversify away from China. Global markets should be interoperable and be able to talk to each other.

ASIFMA, which represents global banks and asset managers, in a report on China39;s capital markets on Tuesday called for clearer, tailormade rules to enable crossborder sharing of data in the financial sector.

Some firms are scrambling to reduce risk in China following a crackdown on sharing of sensitive information, which ensnared a few foreign consultancies in recent months, with Beijing focusing on national security amid escalating SinoU.S. rivalry.

The financial sector lobby group said crossborder…