Why has cloud adoption across capital markets picked up so much in the last few years?
If you think about the evolution of markets, both where they are today and how they compete, operational resilience is the absolute top concern, but resilience is also function of their wider ecosystem as well. Therefore, if you modernise or transform a market, you have to think about the broader list of market participants, including the platforms that they use, the APIs that help them connect, the data that supports their decision-making, and the whole market community in a much wider sense. When it comes to adopting the cloud therefore, we have to think about where to take the whole ecosystem – if you compare a bank and a buy-side firm adopting the cloud, it’s a very different ballgame.
Another driver is regulation, where it’s taken some time for the cloud conversation to gain traction in certain markets. But we’ve now reached a tipping point where the benefits are very clear and visible, and the question has shifted to ‘how’ we make it work in a way that allows market operators to retain data sovereignty and ecosystem control, whilst gaining the benefits of cloud as well. The key to that is partnerships and technology. You can’t just take a market, move it to a public cloud, and forget about the ecosystem – it has to be an approach which takes into account every corner of the capital markets industry. All the players have to move together in the same direction, modernising their infrastructure and ultimately growing the pie for everyone.
Was moving the entire ecosystem as one always the plan for the cloud providers and trading venues?
I think this is where the partnership angle comes into play and where understanding each participant’s need is vital. A lot of it depends on the type of market – for example a retail-focused market may be able to launch in any given location and build its ecosystem virtually. However, more established market operators have well-established data centre infrastructure, which is a different beast. Their whole ecosystem is locked in a complex network and so moving the entire market to the cloud would naturally be a huge challenge.
Success will come with bringing cloud technology to markets in an incremental way, without unrooting existing ways of working, and with optionality to gradually modernise the whole ecosystem over time. Once that shift takes place, it will open up a whole new set of products and services which in turn will make markets more attractive, encourage new sources of liquidity and be better placed to support the economies they underpin.
How is the buy-side sentiment when it comes to the partnership announcements?
On the buy-side, Nasdaq has different solutions across long-onlys, typical asset managers, proprietary trading firms, and they’re all cloud enabled or available as test services with very regular updates. The common thread is that all firms are in pursuit of increased efficiency and prefer working with platforms that solve problems end-to-end, without having to deal with multiple solutions that can be expensive and difficult to operate. Managing and maintaining multiple systems is not an efficient way to operate.
I’ve been somewhat surprised by how hard not just the buy-side but also the sell-side is pushing towards not only cloud, but also SaaS. They increasingly recognise the benefits of drawing on third party platform providers to oversee various forms of operational heavy lifting, such as regular upgrades and ongoing maintenance, to free up resource to focus on driving innovation and growth.
When it comes to Nasdaq and AWS’ relationship, what can you tell us about the future of that partnership?
We have a very long standing and trusting partnership with AWS and recently announced an expansion of our partnership that will see us offer a new suite of solutions to market operators. It provides a blueprint for market operators to accelerate not just their own modernisation journey, but also the wider ecosystem around them. Cloud is also a prerequisite for AI and so this long-term partnership will also be foundational to bringing AI to our clients.
Taken together, it’s about driving towards a vision of modernising markets and helping to build a financial ecosystem which is highly efficient, very innovative and one of integrity. We see the expanded partnership as a major step forward in our own vision to become the trusted fabric of the world’s financial system.