By Richard Balmer, Director of Network Product Strategy at IPC
With so much industry buzz around the term “cloud” it is often difficult to discern the real impact of the technology currently changing the way that capital markets operate. This is in part due to the pace of which we have seen the advancement of tech innovation with cloud adoption acting as a gateway to “revolution technologies”. Including big data, enhanced automation techniques, distributed ledger technology, and AI/ML – bringing with it all the corresponding benefits in terms of digital transformation.
Spurred on by the pandemic, market volatility and the need to stay agile, capital markets are now prioritising cloud adoption. For example, a 2021 Google Cloud study surveyed 102 institutional capital markets professionals, globally, and found that 93 per cent of exchanges, trading systems and data providers are offering cloud-based data services. It further says that 60 per cent of banks are intending to offer more cloud-based trading infrastructure services in the near future. This is reflected across the board and shows no sign of slowing down with a 2021 Celent Thrive to Survive survey indicating there will be large-scale changes by 2025, and 78 per cent of respondents anticipating the near or full adoption of cloud by 2025. Cloud, in its various forms, is here to stay.
Where are we on this journey to the cloud and why choose a multi-cloud option?
As with all technologies, the cloud is ever evolving and with hybrid-cloud plans now common the industry is turning towards the benefits of accessing a multi cloud option. It could be said that multi-cloud is taking its place as the de facto target IT architecture and business model, alongside cloud native as the default approach for application and service development.
The ability to access multiple clouds gives firms the flexibility to make use of all the specific advantages of each cloud provider’s development ecosystem. Multi-Cloud is not simply whether you have connectivity to all the major public clouds, it should include buildout of a private cloud domain conjoined to one or more cloud service providers. This gives you mutability and portability of applications and datasets between domains. Ideally, firms should retain some level of independence from public cloud, this permits them to cover off compliance and data sovereignty considerations which are key in the industry. Importantly, as a consumer, multi-cloud allows you to leverage different cloud platforms.
It is important to be able to shop around – giving freedom of choice and in turn unfettered access to best of breed. Having platform independence from any single cloud provider allows businesses to move their application delivery environments around based upon shifting factors. Such as, performance, cost, compliance, and geo-political events. Ultimately, this provides agility.
The converse situation to this has been described as the “Hotel California problem”. Free to enter but a heavy toll to leave. This is a consideration for any strategy pinned to a single provider – in such situations you are likely to have built everything knowingly or unknowingly around that providers’ capabilities and tools, rather than develop a cloud-agnostic delivery strategy.
Data Data Everywhere!
As one of the first truly data driven industries, Capital Markets have always used data to gain an advantage over their competitors by leveraging superior trading performance. Ensuring performance and security to deliver real time dependency is high on the list of any firm seeking to use the cloud to access it’s many advantages. In order to achieve this, a multi-cloud distribution model must be able to handle latency, multicast and have the ability to assure integrity and performance management. Above all, making the best use of data through a multi-cloud system means businesses can become cloud agnostic – giving multiple and more reliable options otherwise unavailable.
Challenges and Solutions: Cloud Fragmentation and Multicast
Data is being generated from multiple sources across the globe. For real-time dependent systems the challenge is to move this data as fast and securely as possible into and out of the vast number of clouds that exist. For example, even a single public cloud platform is dissected globally into discrete regional clouds. This can generate a few challenges. Firstly, connectivity between these regional clouds for real-time data transfer is provided by cloud providers but does not offer bandwidth or latency guarantees. Secondly, there are multiple public cloud platforms as well as companies’ private data centers. This can result in a fragmented view of the cloud.
The transport for real-time data is sent as a multicast. This is a very common format for distribution of capital markets real-time data streams. Technically, it is highly challenging to carry multicast into and out of public cloud. All external networks and market data feeds are still primarily using multicast, natively, this needs to be integrated at the cloud boundary which can be complex to build and manage for a business on its own.
The scale, innovation and resilience that cloud technologies bring to capital markets in many ways demonstrates a total paradigm shift and could mean that those who do not adapt will be left behind. It is remarkable to see an industry that is synonymous with innovation at this technological crossroads. Now, more than ever before, it is crucial that firms embrace cloud technologies to take full advantage of the agility, scalability, and flexibility it can provide. And, most importantly, firms do not have to manage this alone. The benefits of a managed service provider means that businesses can concentrate on their core business objectives knowing that the data that drives their key business functions are performance assured end to end.
