NYSE Brings Capitalism to The Cloud
Nothing symbolizes capitalism like the New York Stock Exchange. NYSE is best known as the world’s largest exchange. But it’s also a technology pioneer. In 1867, NYSE adopted the ticker tape to send stock data over long distances. In 2011, NYSE built the industry’s first Capital Markets Community Cloud, which could reinvent the entire financial sector.
NYSE set out to create a new model for “customer service and business empowerment.” Moving to the cloud was essential to create a “virtual capital markets community” with fast access to global markets, information and partnerships.
NYSE supports over 2.5 million transactions per day, at more than 80 trading locations around the world. That’s 42 times more transactions than eBay completes in a year.
Brokers, investment banks, hedge funds and financial firms count on NYSE to provide large scale trading, data and network services with no downtime. In the U.S., NYSE exchanges transact$70.8 billion every day.
NYSE Technologies Senior Vice President Feargal O’Sullivan described to me how they built a flexible “market-neutral platform“ for the industry’s unique needs.
Clients need real-time pricing and network connectivity to global markets. They also need historic data for predictive analytics and market simulations. And while strong IT capabilities have been a competitive advantage, they are becoming too costly.
Why A Community Cloud?
Trading clients trust NYSE because it understands their regulatory, data protection and operating challenges. That’s why it made sense for NYSE to architect the Capital Markets Community Cloud.
The Cloud offers Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) only to the NYSE community. As a result, clients can downsize their on premise data centers to purchase cloud services instead. The platform uses VMware technologies and EMC storage in a private network isolated from Internet cyber threats.
The platform’s IsaaS offers elastic computing and storage. The PaaS offers application programming interfaces (APIs) for clients to feed market data into proprietary analytics and simulation algorithms.
The Community Cloud’s “nearly infinite scale” is essential for NYSE’s real-time market data service called SuperFeed. SuperFeed provides direct microsecond connectivity between trading venues like New York and Tokyo. It streams live raw data feeds as high as 8 Gb per second for real-time transactions.
For investors trading NYSE-listed stocks at any venue, SuperFeed delivers “best quoted” trade prices in real time as required by SEC NMS regulations.
Today’s financial IT networks are overtaxed. So the Capital Markets Community Cloud was specifically designed to be high performance, ultra-flexible and affordable for any size firm.
And users like Millennium Partners and Pico Quantitative Trading are excited about how they can adapt more quickly to fast-moving markets.
The Cost Benefit for Compliance
With NYSE’s cloud services, brokers and firms can diversify their offerings without large upfront IT costs.
Smaller firms in particular might also benefit from a reduced cost of compliance.
The financial services sector is heavily regulated. The high cost of compliance can erode a firm’s margin and growth and even put smaller firms at risk.
Since NYSE’s operations are already SEC-compliant, some client users can maintain a smaller footprint to manage their own compliance. According to Feargal O’Sullivan, smaller customers who trade on a limited number of NYSE-supported markets “could potentially save the cost of having their own compliance and reporting staff entirely.”
For prominent small firms like J. Streicher and Sons, New York Stock Exchange member for more than a century, the Community Cloud can make it easier to diversify trading services across asset classes, venues and geographies.
For T.D. Ameritrade, NYSE’s Community Cloud also provides disaster recovery. Disaster recovery has become a popular use case for the cloud. Since NYSE’s data center and network are SEC-regulated, clients are assured that their application environments are secure and will pass regulatory review. T.D. Ameritrade and others can use the savings to buy value-added services around market data, market access and secure financial networking.
As NYSE Technologies CEO Jon Robson pointed out, the “real opportunity” of the Community Cloud is “to rebuild a 21st century version of the financial services community. The whole operating model can change because of this.”
The transformation lies in clients partnering to create new value within the community. For example, firms can link products and content to innovate new services around risk management or adaptive trading. It’s already happening. NYSE plans to capture these innovations in an online store, like a financial services iTunes.
As Feargal O’Sullivan summed it up, “This is the start of a marketplace, where people get to pick, a la carte, the services and capabilities they need, pay for them on an agile basis, with all of the promise the cloud brings to other industries.”
The Capital Markets Community Cloud model looks ideal for other regulated industries like healthcare.
NYSE has pioneered a whole new way to balance the flexibility of cloud with the rigors of compliance.
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