NYSE Builds a Specialty Cloud for Financial MarketsJune 2, 2011
The New York Stock Exchange is rolling out a cloud platform for financial services firms that lets them provision infrastructure and access the suite of NYSE Technologies trading services and market data. The cloud, called the Capital Markets Community Platform, was built by the NYSE’s Technologies business division using a variety of VMware vSphere and vCloud tools, as well as EMC storage products designed for fast data access. Cloud computing experts have long predicted the emergence of vertical-market-focused clouds, and although the NYSE’s effort isn’t the first to launch, it’s certainly the highest-profile example.
During a press conference Wednesday morning, NYSE Technologies representatives presented a business case that’s essentially a microcosm of the overall cloud computing proposition: The specialty cloud will enable new business opportunities by freeing up the resources previously spent building, buying and managing IT infrastructure. They said the platform will focus on infrastructure, services and data access, and likely will expand from the United States into other geographies this year in some cases.
Some use cases for the trading cloud are obvious, while others will require some advanced thinking by both NYSE Technologies and users. Simple use cases would be spinning up a cluster of servers to run batch-processing jobs such as risk analysis or other algorithms, or just accessing NYSE Technologies software as services. Going forward, users of the platform might expect to co-locate processing resources in geographic proximity to the data they are analyzing as that need arises. Also, NYSE Technologies discussed the prospect of enabling hybrid environments spanning its trading cloud and customers’ data centers, or perhaps even connecting into public clouds to some degree.
It’s worth noting, however, that this isn’t a commodity cloud such as Amazon Web Services that relies on the public Internet, but a specialty cloud designed specifically for the security, compliance and low-latency requirements of the financial markets. NYSE Technologies has built a high-performance infrastructure composed of data centers and high-speed networks to ensure fast processing and access to market data. Later this year, the company plans to expand into market hubs around the world so its cloud customers will have even faster access to market data outside of the United States and the United Kingdom, where its data centers are presently located.
Since the economic meltdown in 2008, a cloud computing platform for capital markets is more important than ever. As officials explained during the press conference, financial services organizations are being asked to cut costs where possible, which can be difficult in a field known for spending huge amounts of money on IT. Large banks certainly will keep spending money building out cutting-edge data centers for algorithmic trading and other workloads, but small institutions could see a major benefit. However, noted one NYSE representative, he thinks all the company’s current 1,200 trading customers, ranging from electronic-trading specialists to hedge funds, should look into using the new cloud platform, and their shareholders should push them to do so.
If the NYSE cloud is successful early on, one has to wonder whether it will spur this type of industry cloud in areas such as legal services, health care or other industries faced with the burdens of heavy regulation and high IT costs. Cloud computing might be a relatively easy sell in the trading sector because market data isn’t necessarily as sensitive as data in other fields — latency is probably the biggest concern — but the capability of accessing computing resources from a centralized provider with market expertise should allay some concerns around security, performance and other specific needs of individual industries. An AMD survey released this morning shows that security is still a major concern for many businesses, and, as I’ll discuss in a fireside chat at Structure 2011 next month, the issue of data privacy is still very much a concern when it comes to storing data in the cloud.