NEW YORK-The technology services arm of the New York Stock Exchange Euronext has launched a cloud computing platform that will allow trading firms and banks to outsource their operations. This is the first public "financial services-specific" cloud platform, NYSE Technologies said.
The cloud, officially known as the Capital Markets Community Platform, will host customer applications and trading services, Dominique Cerutti, NYSE Euronext president and CEO, said at the launch event here on June 1. The platform will offer electronic trading, market data analysis, algorithm testing and regulatory reporting. Customers will also be able to access cloud-based versions of NYSE services such as Superfeed, Risk Management Gateway and the Managed Services Hub.
NYSE Technologies teamed up with virtualization software vendor VMware and data storage giant EMC to create the Community Platform. CMPC, expected to go live July 1, is running on Intel Xeon-powered blade servers from Hewlett-Packard, EMC's VNX unified storage platform and VMware's vShield.
"We said, 'Let us do the plumbing,'" Stanley Young, NYSE Technologies CEO, said at the launch event. NYSE Technologies will take care of the platform and the infrastructure and let the clients focus on the services, according to Young.
NYSE Technologies will be creating a virtual trading hub that will connect large and small trading firms. The Community Platform differs from private hubs from groups such as Equinix because it will be a more open and public platform, Young said.
"We're market-neutral in the sense that we run markets, but we also enable transactions to flow through other markets," said Young.
NYSE Technologies will be using its two "massive" state-of-the-art data centers in Mahwah, N.J., and Basildon, England, according to Young. NYSE plans to partner with other liquidity centers in Sao Paolo, Toronto and Tokyo to create "satellite hubs," Young said.
"Order management systems, execution management systems, back testing-so much of the flow can be contained within the physical walls of our data center, reducing the time to trade," said Young.
The "community cloud" will not be connected to the rest of the Internet, but users will be able to interact with each other, according to Carl Eschenbach, head of cloud systems at VMware.
Trading firms and banks are interested in outsourcing more aspects of their business to cut costs while still investing in cutting-edge technology and taking advantage of new platforms. While the financial services industry as a whole tends to be early adopters of new technology, financial markets have been relatively slow to embrace cloud services, primarily because of lingering concerns over security and compliance in the cloud.
"The goal is an open platform to enable frictionless trading," said Young.
NYSE's cloud will provide trading data that can be used to test algorithms with NYSE market data, saving time and expense of downloading the data to a separate center. It can also host proprietary trading software, although firms can also choose to use dedicated hardware in a private cloud scenario. Cerutti noted that the cloud will be most useful for historical market data analysis. Instead of having to download the data late at night, a process that may take several hours, and then uploading it to the customer servers before running any kind of analysis, customers can just point their analytics tools to the cloud for immediate data processing, Cerutti said.
"These are not set-the-world-alight applications ... but they take massive costs out of the industry," Young said.
"We're seeing the first of a wave of these special-purpose clouds," said EMC President and COO Howard Elias at the event.
Although NYSE is opening up its data centers to customers, it will not provide the actual infrastructure. Customers will log in through vCloud Director and provision an operating system, either Red Hat Linux or Windows, and then install their own software, according to Young. NYSE will also offer only dedicated hardware for real-time trading systems, not virtual servers, according to Cerutti.
Pico Quantitative Trading, a division of Goldman Sachs, and Millennium Management, a hedge fund, have already signed up as customers and began the beta program over the weekend, Young said. NYSE Technologies has a roster of more than 1,200 buy- and sell-side companies, and Young said he hopes all of them will eventually take advantage of the service.
Startup companies will find it cheaper to launch with NYSE's cloud computing platform because they won't need to make "significant capital expenditures," said Jarrod Yuster, Pico's CEO.
NYSE Technologies reported annual revenues of $460 million at the end of 2010, but plans to hit $1 billion in sales by 2015. Cerutti said this cloud platform will go a long way toward enabling the company to reach this goal.
"People cannot go back to the business model of three years ago. Clients are asking for more services at less cost," Young said.