The EU's bold move to protect its financial sector has sparked a conversation. Amazon and Google, along with 17 other tech giants, have been named as critical players in the bloc's financial industry. But here's where it gets controversial: these companies are now under direct supervision by EU regulators.
On November 18th, the European Union took a significant step towards safeguarding its financial sector by designating 19 technology companies as critical third-party providers. This move, under the Digital Operational Resilience Act (DORA), aims to mitigate the risks associated with the financial industry's heavy reliance on external tech providers.
The EU's financial regulators, including the European Banking Authority, European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority (ESMA), have identified these companies as crucial to the resilience of the financial sector. The list includes well-known names like Amazon Web Services, Google Cloud, and Microsoft, along with other European tech arms and financial institutions.
The regulators will now assess whether these companies have robust risk management and governance frameworks in place to ensure the continuity and resilience of their services. This direct supervision is a new development, as the EU aims to prevent potential disruptions caused by tech provider outages, which could have a significant impact on the financial sector.
And this is the part most people miss: the UK has also implemented a similar regime, although no firms have been named yet. British regulators are advising the finance ministry on potential candidates, with expectations of designations by next year.
The EU's move has been welcomed by some, with companies like LSEG and Google Cloud expressing their support. Microsoft and Amazon Web Services have also committed to engaging with the relevant authorities. However, not all companies have responded immediately, leaving room for further discussion and potential controversy.
With rising concerns about the resilience of the finance industry, especially in light of geopolitical tensions and technological disruptions, the EU's decision to take a proactive approach is a significant development.
What do you think about the EU's decision to directly supervise these tech giants? Is it a necessary step to protect the financial sector, or could it potentially hinder innovation? We'd love to hear your thoughts in the comments!
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