NYSE Euronext fluffs financial cloud
Amazon for hedge funds
NYSE Technologies – the research, development, and IT operations arm of the NYSE Euronext exchanges in New York and London – has fluffed up a cloud specifically for trading firms.
Saying so won't generate much sympathy among the proles, but trading volumes on Wall Street and in the City are down, and profits for brokerage houses, buy-side and sell-side firms, and hedge funds are down as well. That means the myriad companies in the financial services food chain are under pressure to reduce costs as much as possible.
For such firms, IT expenses, telecom, and data services eat up the biggest part of the budget, and that is why, back in December 2010, NYSE Euronext decided to sit down with storage and security software giant EMC and its virtualization minion, VMware, to hammer out the specs for a cloud aimed specifically at the exchange's existing customers.
The cloud, known as the Capital Markets Community Platform, is not intended to replace the bare-metal trading systems that banks, hedge funds, and other financial players park inside NYSE Euronext's data centers, explained Stanley Young, CEO at NYSE Technologies, at a press conference at the New York Stock Exchange today.
Rather, the financial cloud is intended to augment the low-latency, co-location platforms that financial firms plunk into NYSE's data centers. (One 100,000-square-footer is located outside of New York in Mahwah, New Jersey, and the other 70,000-square-footer is in Basildon, east of London. These two centers have hundreds of thousands of servers hosting trading systems, the company says).
The cloud is designed for batch processing for statements, regulatory filings, testing of algorithms against historical data and the prior day's trading data, and other analytics where I/O latency is not crucial.
There are a number of benefits to using the cloud, Jarrod Yuster, CEO at Pico Quantitative Trading and one of the beta testers for the financial cloud, tells El Reg. For one thing, a lot of financial firms get access to the day's trading data at 11:30 PM local time for the NYSE or Euronext markets, and then begin downloading that data across high-speed (and expensive) wide area network links to their own data centers. This download process takes many hours and lots of dough.
But if you locate the analytical applications that chew on the data inside the NYSE Euronext data centers, you can access the data locally using the Secure Financial Transaction Infrastructure (SFTI) network backbone that the exchange operator uses to link other exchanges, its 1,250 customers, and other market centers into its trading engines and data aggregation services. This backbone is used to create the NYSE Superfeed, which is an aggregation of 170 high-speed exchange and aggregated market data feed handlers. The biggest banks in the world have 80GB/sec pipes (that is bytes, not bits) into the SFTI network, according to Young.
Amazonian in design
The other benefit of a financial cloud, says Yuster, is that companies that want to get into the hedge fund or analytics rackets can deploy on virtual infrastructure managed by NYSE Technologies and use a pay-per-use model, much like Amazon has instituted for its EC2 compute cloud and related services. These companies will no longer have to shell out data to buy servers, storage, switches, firewalls, and such to get going. "The barrier to entry is gone," says Yuster.
And, with the Volker Rule limiting the amount of speculative investments that the big banks and insurance companies can do, Yuster says there will be an exodus of algorithm gamblers leaving these institutions to set up their own hedge shops.
Debate for yourself if this is a good thing or not for the health of the world's economies. NYSE Euronext is going to be there to service them – and make money doing it – with its cloud.
Finally, the other benefit that NYSE Technologies has with its cloud over customers who use EC2 (and many do) or hosting their applications at one of the major telcos (who are ramping up their cloudy efforts with acquisitions and internal investments) is that the 600 sell-side and 650 buy-side market players who already do business with NYSE Technologies over the SFTI network already know the exchange operator. It is a bit of a gamble breaking in any new service provider with a service-level agreement, and financial services firms like to gamble with your money, not theirs.
The Capital Markets Community Platform is a distributed cloud, just like Amazon's EC2, and has portions of it residing in the New York and London metro data centers operated by NYSE Technologies. Young says that the plan is to eventually put cloud extensions into the exchanges in Tokyo, Toronto, and Sao Paolo, and in other "liquidity centers" where proximity makes sense for its customers trying to run their latest "algos", to use the Wall Street lingo.
NYSE Technologies has chosen VMware's ESXi hypervisor and its vCloud Director cloud fabric, announced last August, for the Capital Markets Community Platform. Ken Barnes, vice president in charge of the SFTI network in the America's region, tells El Reg that the exchange operator has no plans to adopt Xen, Hyper-V, or any other hypervisor or OpenStack or any other cloud fabric at this time.
NYSE Technologies has also chosen EMC's VNX unified CLARiiON/Celerra storage arrays to host ESXi virtual machines and applications. NYSE Technologies did not want to divulge what servers are used in the financial cloud, saying only that they were blade servers based on Intel's Xeon processors, but Barnes confirmed to El Reg after the announcement that it has chosen Hewlett-Packard's BladeSystem blade servers for its cloud. Juniper Networks supplies a lot of the switching for NYSE Euronext.
At the moment, NYSE Technologies is using homegrown server provisioning tools that it created for its bare-metal systems to provision virtual servers. The creation of VMs is front-ended by the self-service catalog in the vCloud Director software, which kicks off provisioning of ESXi and then server operating system and application images onto those VMs for the cloud.
Millennium Partners and Pico Trading are the two public beta customers using the Capital Markets Community Platform; there are a number of others, but the exchange operator would not say who they are. The financial cloud will go live July 1. Pricing has not yet been finalized, according to Barnes, but the idea is that over the long haul, NYSE Technologies will be able to demonstrate lower total cost of ownership on its cloud compared to having financial firms buy and run their own equipment – plus give them faster access to data close to the exchanges. ®