CME Group expands Google Cloud partnership to launch new futures and options platform

The plan is to build a new private Google Cloud region to support CME Group’s global trading, offering derivatives traders access to “cloud-based, ultra-low-latency networking and high-performance computing”.

CME Group has enhanced its partnership with Google Cloud as it plans for a new private cloud region and co-location facility in Illinois aimed at bolstering its markets offering for futures and options.

Terry Duffy

The plan is to build a new private Google Cloud region to support CME Group’s global trading, offering derivatives traders access to “cloud-based, ultra-low-latency networking and high-performance computing”.

According to the businesses the specialised platform for capital markets is an industry first, with development already underway beginning with customer testing in the Dallas Google Cloud region. Ultimately, this will become the disaster recovery facility for the Illinois offering. 

Construction is slated for later this year, with CME Group having already confirmed to its clients that an 18-month notice will be provided prior to the exchange moving its markets to the new platform.

Speaking to The TRADE earlier this year, Rohit Bhat, Google Cloud’s managing director for capital markets, exchanges, and digital assets, explained that one of Google’s key focus points was around these deeper collaborations with institutions that represent the value chain of capital markets, with the final aim of playing a part in the future development of the industry.

“There’s a real opportunity to move the needle on how these markets will evolve over the next decade or even next two decades […] Our approach is truly around collaborating directly with the players that can make a difference in this particular space of financial services. 
“[…] We’re here not for the value that’s going to come in 2024 only. Our investments are thoughtful enough to go farther out to multi decade.”

Read more: As cloud adoption across the market continues to rise, is the shift of liquidity itself next to follow?

The Chicago location is set to allow CME Group’s clients to utilise existing connectivity options for other global markets.

Clients can decide whether to opt for self-managed infrastructure in the co-location facility or Google Cloud’s specialised infrastructure-as-a-service offering. Both have equal network latency to the exchange.

Users are set to benefit from expanded flexibility, strengthened operational efficiencies, and increased access to cloud services, and artificial intelligence (AI) capabilities.

Terry Duffy, CME Group chair and chief executive, said: “Google Cloud’s new specialised platform will extend the benefits we can provide to our clients through next-generation cloud technology, expanded access and efficiencies, a broader range of customised connectivity options, and faster product development, with minimal disruption to their current operations.”

CME Group and Google Cloud have been in partnership since 2021, with recent work having been made to enhance CME Group’s cloud-based data platform and migration of critical clearing applications to the cloud.

The businesses struck a 10-year deal in November 2021 to partner and move the exchange’s trading systems to the cloud (with Google at the same time, separately, investing a billion dollars in the business).

“Our latest milestone with CME Group builds on our shared goal to accelerate CME’s move to the cloud and innovate capital markets infrastructure worldwide,” asserted Thomas Kurian, chief executive of Google Cloud.

“Through our collaboration, we’re harnessing the best of cloud computing, data analytics, and AI, while respecting the existing custom hardware requirements of market participants to bring low latency, deterministic, and scalable trading environments to CME Group customers and the broader financial markets.”

Recent times have seen a swathe of investments from major cloud providers into leading exchanges. Over the last three to four years significant investments have been made, and long-term partnerships forged across the market.

In 2020, the Singapore Exchange (SGX) completed a proof of concept with Amazon to build a cloud-native exchange, whilst Deutsche Bank signed an innovation partnership with Google Cloud the same year. Following this, in November 2021, Amazon (AWS) and Nasdaq signed a multi-year agreement aimed at jointly fostering a new cloud-based market infrastructure and migrating every exchange to the cloud by 2028.

More recently, Microsoft and the London Stock Exchange launched a 10-year strategic partnership back in December 2022 also focused on developing cloud infrastructure solutions, whilst in February last year, Google Cloud officially became Deutsche Börse Groups’ preferred cloud partner for the next decade.