Powered by the Cloud: The New Era of Market Data

By Russell Blinch, for CME Group

IN ONE LOOK

  • From agricultural technology to hedge funds, more and more market participants are looking for instant market data exchanges via the cloud
  • The cloud storage market is expected to grow 25% per year to reach over $150 billion per year by 2026

A farmer in a remote corner of Brazil wondering about this year’s harvest might step out to study the clouds, all before making several calls for a static snapshot of opaque grain markets.

But if he works with the Brazilian start-up Grao Diretohe can reach for his smartphone and consult something better – the digital cloud where a wealth of market information awaits him, the kind of data that only a few years ago was unimaginable for producers and sellers.

This is the kind of requested data whose availability has increased exponentially in recent years.

Founded in 2017, Grao Direto has developed a cloud-based application that connects grain buyers and sellers while providing a real-time view of physical markets, an era-changer from when producers n only had a limited view of vital market information. In 2020, they partnered with CME Group to access market data in the cloud to support their business.

Data customers need flexibility

From commodity traders to equity investors and in the crypto world, investors are increasingly turning to cloud-based technology to access vital market information quickly and cost-effectively.

But according to some of its biggest proponents, the trend towards the cloud may still be in its infancy, as demand grows for ever more complex information flows.

“What we are seeing is a wide range of customers looking for exchanges to provide more flexible ways to access and interact with underlying data through analytics solutions,” Trey Berre, Global Head of CME Data Services, told a recent panel.

CME Group was the first derivatives exchange to offer a real-time, cloud-based market data product with the launch of CME Smart Flow in 2019. Customers got access to its real-time data feed running on Google Cloud Platform. In 2020, CME announced that customers could also tap delayed data via cloud. More recently at the end of 2021, CME announced a transformative partnership with Google Cloud to accelerate its transition to the cloud and transform the way global derivatives markets work through technology.

Founders of Grao Direto (LR) Alexandre Borges, Andrade Marques and Frederico Vitor

Today, CME Group has more than 25 partnerships with companies around the world to deliver data through the cloud. Clients range from trading companies to hedge funds, proprietary trading firms, retail traders and third-party providers.

Berre, speaking at a recent Coalition Greenwich eventsaid CME is dedicated to exploring how to make market data more customizable, while making information easier to access.

“Our cloud investments can really align with our goal and strategy to make it easier to do business with CME Group for our customers,” helping customers “grow and innovate.”

Today, some 93% of exchanges, trading systems and data providers offer cloud-based products, according to a recent study survey by Coalition Greenwich, commissioned by Google Cloud.

The trend is led by buy-side companies, with nine in 10 connecting to the cloud for market data, according to the survey. Some 67% of concerns on the sell side have turned to the digital skies, and 88% intend to consume even more data.

According to a report by Market data forecast.

Demand transformed by the pandemic

Cloud computing has been growing for a few years now, but the pandemic has introduced a new urgency due to the need for employees to work from home, making the office a geographically dispersed challenge.

“You don’t need to be near your servers. You don’t need to be close to your market data. These things can actually be accessed by you through the digital world and the physical doesn’t matter as much anymore,” Ulku Rowe, CTO, Financial Services, Google Cloud, told the Greenwich panel.

Ralph van de Klundert, co-head of data at Transtrend, an experienced systematic investment manager, said this opens up opportunities for business startups, which have long struggled to deliver data to clients in a way that’s both manageable and profitable.

Prior to the launch of the CME cloud product, the company created a direct data flow solution with CME Group. “It was expensive because there was a huge amount of data streaming in our office. It wasn’t scalable, it wasn’t the right solution, maybe not the right time.

But now Transtrend has found the right solution by working with CME Group Data Services, with Google Cloud managing the digital infrastructure. “I think it’s very scalable, it’s very usable,” he said. “It’s pay-as-you-go and it’s very unique. This solution can replace our existing data providers in the future for our use of CME data. »

Beyond human comprehension?

The race to the cloud with its terabytes of data can be mind-boggling considering how the need for ever more intelligence has evolved over time. Market data has moved from blackboards on trading floor floors to huge data centers. Information analysis programs must also keep pace.

“This data that used to sit on spreadsheets is now almost beyond human comprehension,” Google Cloud’s Rowe said during the Coalition Greenwich panel. She said that for clients to manage the massive flow of information, they need better analytics. The next level is artificial intelligence, the so-called AI tools, to help customers gather the information they need to deal with the information tsunami.

CME Group’s Berre said demand for better understanding of data is skyrocketing. “Where we see most of the demand today is on the buyer side, or with some of our smaller accessory businesses, or even increasingly sophisticated retail marketers, looking for l opportunity to execute individual strategies for more accurate and deeper intelligence in the underlying data.

Alexandre Borges, CEO of Grao Direto, was impressed with the advances in innovation already made by cloud technology, which he says helped make small startups like his early on possible. His company was formed by three childhood friends and just $10,000 in start-up capital. Now its mobile app already has around 200,000 downloads, it employs over 75 people, has a few million in fundraising with plans to continue to grow exponentially supported by cloud technology.

“We were able to access the servers and infrastructure that Google Cloud offered because it was cheap,” he said. “Imagine, being in Brazil, we had access to state-of-the-art infrastructure.”

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