NYSE Euronext Builds Capital Markets Cloud

Stock exchange hopes to lure trading firms onto new on-demand computing platform.

Paul McDougall, Editor At Large, InformationWeek

June 1, 2011

3 Min Read

NYSE Technologies, the electronic trading arm of NYSE Euronext, has launched a cloud services offering aimed at its financial industry customers, mostly dealer-brokers, hedge funds, and other market makers.

"We can now manage things that are not core for them," said NYSE Euronext president and CEO Dominique Cerutti, at a launch event Wednesday at the company's Wall Street headquarters. Cerutti said the cloud, officially known as the Capital Markets Community Platform, is "a significant step" in NYSE Technologies' plan to become an agnostic service provider that builds and hosts services not just for NYSE Euronext and its customers but also for competing institutions.

"We're market neutral in the sense that we run markets, but we also enable transactions to flow through other markets," said NYSE Technologies CEO Stanley Young.

The cloud services are hosted at NYSE Euronext datacenters in Mahwah, New Jersey and Baselton in the UK. Plans are also in the works to create satellite hubs with partners in liquidity centers like Toronto, Sao Paolo, and Tokyo. The infrastructure consists mainly of storage and virtualization tools from EMC and VMware, running on Intel Xeon-powered blade servers. Hosting prices are based on customers' consumption of CPU cycles. "The goal is an open platform to enable frictionless trading," said Young.

The platform is set up to host customer applications and services such as electronic trading, market data analysis, algorithm testing, and regulatory reporting. Customers can also access cloud-based versions of proprietary NYSE services like Superfeed, the Risk Management Gateway, and Managed Services Hub.

To date, NYSE Technologies has lured two customers from its roster of more than 1,200 buy- and sell-side companies over to the service, Pico Quantitative Trading and Millennium Management LLC. Pico CEO Jared Yuster said the cloud model, which allows companies to share infrastructure costs, should appeal to financial industry startups like his own and larger, more established firms that have had to cut costs in the wake of the industry's post-Lehman Bros. meltdown.

"We don't have to make significant capital expenditures" to take advantage of NYSE's cloud computing resources, said Yuster, a former Intel engineer.

NYSE's CMPC is among the first of what's expected to be a host of specialized cloud offerings aimed at industries with demanding and unique regulatory, security, and transaction requirements. BT now boasts more than 15,000 members on its BT Radianz financial services cloud. And Microsoft recently launched a range of cloud services aimed at healthcare organizations. "We're seeing the first of a wave of these special-purpose clouds," said EMC president and COO Howard Elias.

But widespread adoption of industry-specific clouds isn't a given.

Companies that operate in heavily regulated environments tend to be very security conscious and may not warm to the notion of co-locating data in the same facilities that host their competitors' information. And businesses that operate in more relaxed industries, such as retail, may opt for less expensive, generic cloud offerings from service providers like Google and Amazon, despite some highly publicized outages.

Pico's Yuster said he isn't worried that his data could get exposed in the cloud. "We're very comfortable that our information is protected and segregated," he said. Among other things, NYSE's CMCP uses VMware's vShield, which is designed to provide application security in virtualized environments. Data is stored on EMC's VNX unified storage platform.

NYSE Technologies' Young is confident CMPC will see significant adoption, if for no other reason than that trading firms need to stay out of the red. "People cannot go back to the business model of three years ago. Clients are asking for more services at less cost." NYSE Euronext Shares were off 1.98%, to $35.69, in afternoon trading Wednesday.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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