Euronext says non, nein to US cloud providers services as rivals sign up

Data sovereignty and compliance gives CEO pause for thought as Deutsche Börse AG jumps in bed with Google

Pan-European stock exchange Euronext says worries about data sovereignty and compliance means it will not follow rivals into signing contracts with US public cloud megacorps.

Just yesterday, Deutsche Börse AG inked a decade-long agreement with Google as its “preferred” cloud for the next decade, which has echoes of its previous deal with CME Group, the world’s largest financial derivatives exchange.

Nasdaq is working with AWS, and the London Stock Exchange went all in with Microsoft late last year.

However, Euronext – which uses a cloud biz to store historical data – reckons its own outlook mirrors that of financial regulators. The stock exchange's chairman Stephane Boujnah told Reuters:

“One of the reasons why we are cautious about the use of datacenters of Microsoft, Google and Amazon for critical parts of what we do is because our core supervisors and regulators are themselves very cautious.”

He added: “When it comes to strategic applications such as real-time data and operations of the market, we do not want them to be stored and operated by the datacenters of companies which have decision-making centers outside the EU, and physical infrastructure outside the EU.”

The European Banking Authority filed recommendations on outsourcing to cloud service providers in late 2017. These address data security, location of data and data processing; access and audit rights; chain outsourcing; and exit strategies. They were designed to let financial institutions use the cloud while managing perceived risk.

Lawyers at Pinsent Mason said in September that termination and exit of a contract, subcontracting, and audit rights remain potential pitfalls.

International exchange Deutsche Börse AG says that as well as running the Digital Asset Business Platform on Google’s servers, its contract is intended to help it speed up development of the D7 digital securities platform, and the duo plan to jointly build a data mesh for data distribution.

Theodor Weimer, CEO at the exchange, said in an earnings call this week: “Tokenization and digitization are very important trends for us, and we started to lay the foundation to expand into new asset classes and service offerings with a number of different initiatives. This will be accelerated by the strategic partnership with Google Cloud.”

Weimer added: “We are targeting a public cloud exposure of around 70 percent, seven-zero percent, over time. In addition, we will be launching joint projects to accelerate the development of new and innovative platforms.”

Weimar said certain aspects of its business would remain based on its own servers. “Low latency trading and learning systems will remain on-premises.”

The subject of data sovereignty is a sticky one for local cloud providers in Europe, but US rivals certainly appear to be winning the race for custom: US cloud titans account for almost three-quarters of cloud spending in the region.

Not everyone is happy with the way that business is being won, certainly in the case of Microsoft, as several complaints about anti-competitive behavior against Redmond are now in the hands of EU regulators. ®