Many of the major exchanges have established formal partnerships with a cloud services provider or have received a significant investment from one in the last couple of years. What’s driving this?
Exchanges—like all financial market infrastructure—are critically important, especially within the capital markets space where they tie together the financial services community. Demonstrating the ability to run these systems in AWS, accelerates innovation for the industry as a whole. Our partnerships, like the one we built with Nasdaq over the last decade, highlight that a variety of exchange workloads—everything from the reporting, index calculations, surveillance, and market data distribution, all the way to the mission critical functions—can run on AWS.
Nasdaq continues to work closely with AWS to advance the modernisation of markets by driving innovation in the underlying infrastructure that power markets to deliver enhanced performance, transparency, security, resiliency, and integrity. Together, Nasdaq and AWS are transforming what’s possible for capital markets and delivering on a commitment to create an interconnected future—one that is safer and stronger for everyone, in the cloud.
Are capital markets participants prepared for this shift [to the cloud]?
Given the level of adoption we continue to see across the industry it’s surprising to hear the perception that there’s any reticence. Capital markets firms from virtually every component of the trade lifecycle have been leveraging AWS for over a decade to power their important workloads. Additionally, if you look at every segment of the capital markets space—from the financial data driving investment decisions to the analytics needed for investment research and trading—you see firms accessing data and market intelligence on AWS.
Firms like Bloomberg and FactSet are delivering real-time data directly to customers on AWS. Dating back to 2018, AQR spoke at AWS re:Invent about using AWS Batch to develop investment signals. More recently, firms like QRT and Bridgewater have talked how they’re using the latest AWS technologies to drive the analytics for their own trading and investment strategies.
AWS also powers trading platforms for activities among various market participants, ranging from retail investors trading using an online brokerage like Robinhood to Fidelity, which migrated their Asset Management equity trading platform to AWS last year. As noted earlier, Nasdaq runs regulated exchanges on AWS, but there are many other liquidity venues like Coinbase, running on AWS, or Broadridge LTX, which has its fixed income trading platform on AWS. Additionally, customers use AWS to process the volumes of data that support capital markets, including market surveillance, like the NYSE does for their own exchange or what FINRA’s Consolidated Audit Trail does for the broader U.S. markets. The OCC has also announced they are modernising their clearing, risk management and data management applications on AWS.
Is there a readiness gap across the capital markets industry for cloud adoption/migration?
Given how much capital markets infrastructure can and does run on the cloud, there are very few workloads that we haven’t seen migrate. The workloads with more complex migrations tend to be heavily latency sensitive for regulated markets, but even those can run on AWS.
In these cases, instead of strictly using the public cloud, there are often investments in hybrid infrastructure that enables a mix of on-premise deployments with AWS. This approach is indicative of the work our team has done with Nasdaq to build a custom version of our Amazon Outposts, which made it possible for us to support their workloads without disruption.
How does the capital markets landscape continue to evolve with greater cloud adoption?
Increasingly, as more critical capabilities or building blocks fundamental to financial services run on AWS, we see our customers have a greater ability to build applications more quickly, leveraging the infrastructure that capital markets rely on today but delivered natively in cloud with improved security and resilience. That level of accessibility will enable even greater innovation and experimentation by reducing the technical and financial undifferentiated heavy lifting across the industry.
Already, we’re seeing examples like B-PIPE, Bloomberg’s real-time market data feed globally available through AWS, which can be spun up in minutes as opposed to the weeks it takes with on-premises infrastructure. There’s also Fusion by J.P. Morgan, which is a solution for institutional investors that seamlessly integrates and combines data from multiple sources into a single model to deliver the benefits of scale and reduced costs while more easily unlocking timely analysis and insights.
What are the key benefits of the cloud for capital markets participants?
With the need for capital markets participants to manage periods of market volatility, having the ability to scale up a technology platform when there is demand unlocks new business potential by eliminating the possibility of over or under investing in infrastructure. Cloud adoption in the capital markets space creates greater efficiency and operational flexibility enabling better business cost management as opposed to requiring large upfront capital investments.
Capital markets is a global business, and having the ability to leverage AWS’s global infrastructure allows our customer to explore new markets and products more quickly and with lower financial risks. Customers have the ability to quickly respond to increased demand while taking advantage of the enhanced reliability and security that AWS provides as part of its services.
In addition to the cost efficiency and resiliency that our customers experience, they also can expect a lower impact on their environmental footprint.