By Pete Schroeder

(Reuters) -A ransomware attack on Industrial and Commercial Bank of China (ICBC) disrupted some trades in the U.S. Treasury market on Thursday, the Treasury Department said.

In ransomware attacks, hackers encrypt an organization's systems and demand ransom payments in exchange for unlocking them. It was not immediately clear who was behind the attack.

The Financial Times reported earlier on Thursday that the U.S. Securities Industry and Financial Markets Association (SIFMA) told members that ICBC had been hit by ransomware that disrupted the U.S. Treasury market by preventing it from settling trades on behalf of other market players.

"We are aware of the cybersecurity issue and are in regular contact with key financial sector participants, in addition to federal regulators. We continue to monitor the situation," a Treasury spokesperson said in a response to a question about the FT report.

ICBC, China's largest commercial lender by assets, was beginning to restore services as of Thursday afternoon, the newspaper said, citing people briefed on the ransomware attack, which paralyses computer systems unless a payment is made.

The Treasury market appeared to be functioning normally on Thursday, according to LSEG data.

SIFMA declined to comment. ICBC was not immediately available to comment.

(Reporting by Urvi Dugar in Bengaluru and Pete Schroder in Washington; additional reporting by Zeba Siddiqui; Editing by Alexander Smith, Michelle Price, Lisa Shumaker and Diane Craft)