Google reaches a billion-dollar deal with the financial industry, bringing the world’s largest derivatives exchange to the cloud

Google has just reached an agreement to invest 1 billion dong in the giant derivatives exchange CME Group Inc and move the company’s core trading system to Google’s cloud. Under this agreement, Google Cloud – Google’s cloud computing business – will handle the trading activities of this vibrant derivatives market with a value of up to trillions of dollars per day.

The 10-year agreement will allow CME to make transactions faster and more seamless, as well as develop new tools that are better with Google technology, such as AI software for monitoring, the company said. monitor market risks.

In the field of cloud computing, trading companies often outsource computing processing and data storage services from technology firms, instead of developing their own systems.

Cloud providers like Amazon, Google, and Microsoft are jostling for market dominance in the financial sector, which has been slower than other industries to adopt cloud technology. The source of this is often related to the strict supervision regulations of banks and exchanges, as well as concerns about the leakage of sensitive customer data.

The deal with CME gives Google a foothold in this difficult field. With a market capitalization of up to 79.2 billion USD, CME is the most valuable exchange operator in the world, surpassing even Hong Kong Exchanges & Clearing Ltd. The Chicago-based company operates a range of exchanges, from oil to gold and futures markets.

According to research firm Gartner, Google Cloud is the world’s fourth largest cloud service provider with 6.1% market share of world cloud infrastructure revenue. The leader is still Amazon with a market share of more than 40%, followed by Microsoft with Azure and third is Alibaba Group Holding.

In addition to the cloud deal, Google also invested $1 billion to own convertible preferred shares of CME Group. The transaction is the largest investment Google has ever made in financial services.

In the interview, Google Cloud CEO Thomas Kurian called the investment ” a reflection of our commitment to transforming the financial system, not just a company’s infrastructure .”

Moving CME’s trading system to the cloud is a project fraught with difficulties not seen in conventional cloud migration projects.

Exchanges like CME handle a huge volume of price points and trades, much of which is submitted by high-speed brokers with systems that can process millions of orders placed in a single order. second. And if an exchange goes down, it not only causes inconvenience to traders, but also causes huge damage to the financial markets.

Despite these difficulties, many exchanges have started to apply cloud technology to their systems. Last year, the popular NASDAQ exchange said it planned to move its entire trading market to the cloud within the next decade. However, this reputable exchange has not said who will provide the technology for them.

Not only Google, Amazon is also paying attention to this business. Last year, the cloud giant completed a pilot project with Singapore Exchange and European market operator Aquis Exchange PLC to demonstrate its ability to run an exchange at super speeds. Fast, high volume is possible thanks to Amazon technology.

CME will begin migrating its technology infrastructure to Google Cloud next year. Initially, the two sides will focus on CME’s data and payment services, which are not as speed-sensitive as the core of the trading system. Ultimately, CME’s plan is to bring all of its trading operations to the cloud.

Refer to WSJ