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Regulation and Compliance > Federal Regulation > FINRA

FINRA Seeks Feedback on BDs' Cloud Computing Practices

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What You Need to Know

  • FINRA is asking broker-dealers for feedback by Oct. 16.
  • The report follows a review of nearly 40 broker-dealer firms.
  • FINRA wants BDs to also weigh in on where guidance or modifications to FINRA rules could support cloud adoption.

The Financial Industry Regulatory Authority is asking broker-dealers for feedback by Oct. 16 on how cloud computing models are transforming how they operate.

FINRA just released a report, “Cloud Computing in the Securities Industry,” issued by its Office of Financial Innovation (OFI), following a review of nearly 40 broker-dealer firms, cloud service providers, industry analysts and technology consultants, to better understand the implications of cloud computing on the securities industry.

The report also highlights the importance for firms to consider relevant regulatory factors for maintaining investor protection and market integrity, FINRA said Monday.

Measured by the revenues earned by public cloud providers, the size of the cloud market is projected to reach $307 billion in 2021, from $182 billion in 2018 — a 19% average annual growth rate from 2018 to 2021, the report notes.

FINRA is seeking comments on the report, including areas where guidance or modifications to FINRA rules may be desired to support cloud adoption while maintaining investor protection and market integrity.

“This report is intended to serve as a tool for our member firms and other industry stakeholders by providing information to help them learn from the experiences of others. In addition, it provides useful insights regarding the challenges and benefits associated with implementation of a cloud computing framework, from both an operational and regulatory perspective,” Haimera Workie, head of the Office of Financial Innovation and Senior Director at FINRA said in a statement.

“As broker-dealers are at various stages in their cloud computing journey — from full or partial integration, to pilot projects or not at all — many firms are seeking to explore how these technologies can be used to personalize customer experiences, analyze larger amounts of data faster and increase their competitiveness in areas of rapid innovation.”

The report notes that regulatory factors for those operating or migrating to the cloud to consider include: cybersecurity, data privacy, outsourcing/vendor management and business continuity.

(Image: jijomathaidesigners/Shutterstock)


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