Which federal agency is regulating and will have the greatest impact on the cloud? Hint: There is a right answer.
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Session Abstract
It’s not the FCC, FTC, SEC, or any other major federal agency, but a lesser-known agency called the Commodity Futures Trading Commission, or the CFTC. If you are thinking they just regulate corn, you are in deep trouble because it means you have not yet complied with their required registration of certain cloud computing companies.
If you have not followed the CFTC, or taken steps to register as a hosting or cloud computing service provider, you may be facing severe penalties, huge breaches in current service contracts, and deep impacts to your profit margins.
The cloud computing and hosting industry has successfully avoided large-scale infrastructure regulation for the past ten years. However, over the past two years, there has been a federal government ramp up of regulations that severely limit the industry’s ability to contract, to manipulate and make actionable data, and to otherwise grow. There are five current regulations at varying stages of formation (either already applicable law, currently being drafted, or somewhere in between).
First, the CFTC has proposed regulation that limits the hosting and service providers ability to freely contract. This includes requiring all cloud computing and hosting companies to charge ONE price to every customer, regardless of current contracts or negotiations. Part of this same regulation requires that the service providers, including data centers, must make room for (even if that means building a brand new data center if the old one is at capacity) and provide services to any “willing and able” potential customer, regardless of credit worthiness or liquidity. As long as just one financial service or market participant is in the same data center (including oil, gas, or energy companies), this regulation will apply to that facility and every service provider in it.
Second, the same agency is currently forming the new swaps and over-the-counter derivatives market, which is a $600 Trillion market. One finalized regulation requires that any market participant must provide the CFTC with its vendor’s or its own data analytics plan before participating in the market.
So, if any of your clients are banks, financial advisers, hedge funds, market traders, exchanges, oil, gas, or energy companies or are at all trading on a commodity or equity market, then both you and your client are equally responsible for providing the CFTC and other agencies with your data analytics, algorithm, or business intelligence products. Your client will be stopped from trading unless this demonstration happens first. That is the current law. If you already knew the law, then terrific. You need to communicate with the CFTC to show them how your data tool is not going to cause a flash crash. If you have not provided information to the CFTC, then the data product you created is now useless because your client is legally prohibited from using it for its intended purpose.
Third, there are many steps to take to prevent a flood of litigation by banks of cloud computing companies. The first is to organize. The second is to establish creditability with the CFTC, your “would be” regulator. And the third is to make products for the CFTC, thereby making your regulator your client.
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