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May 8, 2019updated 09 May 2019 10:21am

Deutsche Börse’s Azure Contract is a European Milestone

"An important signal for the financial services industry"

By CBR Staff Writer

In a major coup for Microsoft, it has closed a deal with German stock exchange group Deutsche Börse AG that will see the operator of the Frankfurt Stock Exchange – and a host of other prominent trading platforms – begin to shift services to Azure.

The contract is an industry milestone and a significant indicator that European regulators are overcoming their historical distrust of the cloud, given the centrality of the €23 billion (by market cap) Deutsche Börse to a range of European markets.

Deutsche Börse

Christoph Böhm, Deutsche Börse AG with Sabine Bendiek, Microsoft Germany

The contract takes “regulated workload” into the cloud. This includes services that are typically provided by financial institutions like Deutsche Börse themselves and are considered essential for their critical core business.

Operating these workloads in a cloud environment requires adherence to a raft of strict EU regulations.

Sabine Bendiek, Managing Director of Microsoft Germany said: “This step is an important signal for cloud adoption in the entire financial industry and other industries with regulated workloads. With our joint approach, Deutsche Börse and Microsoft enable all companies in the European financial market to make full use of cloud services.”

Regulators Require “Unrestricted Audit Rights”

Joint approach? As the two explained in a post this week, they have been collaborating for some time to develop a collaborative cloud audit group.

Deutsche Börse said: “EU financial institutions are required to ensure unrestricted audit rights and capability to perform audits in case they outsource material workloads to cloud service providers. As a result, Deutsche Börse initiated a collaborative cloud audit group (CCAG) in 2017 in order to comply with these regulatory requirements.”

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The company added that these audits are performed collectively, “significantly reducing the effort for both financial institutions and cloud service providers. This industry-wide initiative includes large EU financial institutions and insurance companies. The CCAG and Microsoft will perform regular pooled audits on an annual basis.”

Deutsche Börse Migration Starts with SAP 

Accelerated cloud migration will start this year, with the development and testing of business applications and parts of the Deutsche Börse SAP environment in Azure.

The first material regulated workload, such as core services to disseminate data “will follow subsequently in close alignment with the relevant regulatory authorities”, the company said, suggesting regulators will be watching closely.

The contract also includes deployment of Microsoft 365.

Deutsche Börse added: “Operating IT workload in Microsoft’s public cloud environment will ensure agility, enhanced quality and cost efficiencies. It will allow a faster implementation of new functionalities, improve efficiency by further automating the provisioning of infrastructure and services [and let] Deutsche Börse react dynamically to changing business and customer demands.”

The company also operates Tradegate Exchange, the European stock exchange
for private investors; organises one of the world’s largest derivatives markets,
Eurex; operates Europe’s leading energy exchange, the EEX; runs one of the largest FX trading platforms worldwide, 360T; and offers its own indices such as DAX.

Regulators are Still Twitchy

The European Securities and Markets Authority (ESMA) last month wrote to the European Commission to warn that “concentration risk associated with third parties in the financial sector is also a cause for concern in relation to financial stability.”

“This concern”, it added, “is especially acute with regard to cloud services, as a few large providers service the majority of the EU financial sector and many other sectors.”

ESMA suggested the Commission establish an “appropriate oversight framework” for monitoring critical service providers like major cloud providers, saying “there are concerns that their interconnectedness in the financial system could be a single point of failure if one were to be subject to a serious breach.”

It is clear that when it comes to cloud, although trust is growing, there’s work to do and more regulation may yet follow.

Read this: HSBC Building Artificial Intelligence Utility: Has 10PB Data, Needs AI Help

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