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Chicago Mercantile Exchange plans cloud spot exchange

Internet Security Threat Report 2014

If you thought cloud computing was complicated now, just wait until next year, when pin-striped traders will buy and sell contracts in the stuff.

At least, that's the plan of the Chicago Mercantile Exchange, which announced on Monday that it had signed a "definitive agreement" to build a commodity exchange dedicated to the buying and selling of infrastructure-as-a-service contracts whose value will be determined via a technology from cloud measurement firm 6fusion.

This means that one of the world's largest options and futures exchanges reckons that the cloud market has matured to a point where it can make money out of giving people the option to trade resources from different providers against one another according to market conditions.

In other words, the differences between the types of compute and storage on offer from the top companies are now so minor that they can be traded in a single market – no wonder most companies are getting out of selling the low-margin commoditized servers and arrays that form these clouds.

The exchange will use technology from 6fusion to rank the resources from different providers to take into account varying performance characteristics like network bandwidth, RAM allocations, CPU speeds, and so on.

The CME will use 6fusion's abhorrent travesty of language, the "Workload Allocation Cube", to help it convert cloud resources from different providers into a tradeable commodity.

"What we've been doing for the last couple of years is working with the CME to construct the underlying plumbing to build the software foundation," explained 6fusion chief John Cowan in a chat with El Reg. "The big picture is the creation of the open market for both buyers and sellers of cloud infrastructure."

Initially, the spot market will be – in trading parlance – "on-demand and forward contracts", which a 6fusion spokesperson said is: "contracts for delivery of a specific amount of infrastructure consumption over a defined period in the future."

Though 6fusion is not disclosing which suppliers it has signed up to the exchange yet, when we pointed out that for the exchange to have credibility at launch it would have to cover, at least, the big three suppliers – Amazon, Google, and Microsoft – Cowan said: "I agree with you. ... when we take the lid off the spot exchange there will be a host of recognizable names."

6fusion will charge suppliers to the market a small fee for every contract sold. "If you're going to take delivery [of payment] you do have to register and be a supplier in the open market," Cowan said.

The agreement between the CME and 6fusion is an encouraging one, and follows the exchange announcing last September that it had signed a non-binding Letter of Intent with 6fusion to develop the technology. It seems it think it's worth pursuing, but the critical point of validation will be whether Microsoft, Amazon, and Google think so as well.

We believe they will – after all, what could possibly go wrong? ®

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