Despite the increasing range of service providers offering cloud computing solutions to the financial services industry, many financial institutions struggle to secure the types of controls and other measures they would normally obtain in other types of IT transactions in order to comply with their regulatory obligations and internal procedures.
On Monday 12 October 2015, Mark Prinsley (Partner, Mayer Brown International LLP) chaired a discussion of the key issues that typically come up in a negotiation between a cloud service provider and a financial institution. From the panel, Craig Rogers (Lead Counsel, Financial Services Europe, IBM), Jill Savager (Manager, Operational Risk, Investment, Wholesale and Specialist Supervision Division, The Financial Conduct Authority), Neal Suggs (Vice President and Associate General Counsel, Microsoft Corporation) and Oliver Yaros (Senior Associate, Mayer Brown International LLP) provided their perspectives on the issues that service providers and financial institutions face, the positions that might be reached in these types of transactions and how any solutions for addressing the regulatory challenges of the financial services industry may provide a model for other highly regulated industries adopting cloud solutions in the future.
Mark first provided an overview of what cloud computing is and the typical structure of a cloud computing contract. He then asked the panel to discuss the key legal issues that typically arose during a negotiation between a cloud service provider and a financial institution, which included the following:
1. control over changes to the service
2. use of third parties to provide elements of the service
3. requirements on privacy, handling and transfers of data
4. assurances about using the service
5. suspension or termination of the service by the service provider.
The panel discussed these issues in turn, with Jill Savager explaining her opinion from the point of view of the regulator, Craig and Neal outlining the positions that might be taken by service providers in response to requests from financial institutions on these issues and Oliver explaining a financial institution’s common requirements and how these issues are typically resolved in these types of negotiations.
This is a brief summary of the event and cannot do justice to the insight and detail of the information shared during the event.
Dawn Ying is Trainee Solicitor at Mayer Brown International LLP.
