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| The UK wants to regulate tech firms that are considered ‘critical’ to finance |
(Bloomberg) – The UK wants its financial watchdogs to directly monitor tech firms that provide critical services to the industry, as regulators are increasingly concerned about banks’ growing reliance on cloud computing.
The UK Treasury is proposing to designate some non-finance firms as “critical” for running the industry, according to a policy statement on Wednesday. Regulators may make rules relating to the provision of these physical services, collect relevant information from those companies, and take formal action, including enforcement.
The release did not name any firms that are likely to fall within the scope of the proposal, but said regulators around the world would move finance to cloud computing, Amazon.com Inc. And Microsoft Corp. Concerns are growing about the services that will be provided by a handful of companies by 2020. According to a Treasury statement, more than 65% of UK companies use the same four cloud providers for cloud infrastructure services.
The proposals include allowing financial regulators to set minimum flexibility standards that third parties must “meet directly in relation to any physical services they provide to the UK finance sector,” the statement said. Companies are required to participate in a range of “targeted type resilience tests.
Last year, the Bank of England said it wanted additional rights to switch the finance industry to cloud computing. Companies are moving their highly sensitive IT systems into the cloud, allowing them to spend less on their own data centers and rely on the security and computing power of tech companies. The largest providers are Amazon Web Services, Microsoft Azure and Alphabet Inc.Google Clouds.