Data & Analytics Insights

Financial market data and public cloud: building for today and towards tomorrow

Bill Jary

Director, Real-Time Strategy
  • The idea of market data in a firm’s public cloud is genuinely exciting – as both exchanges and financial firms are looking at ways to engage with the public cloud
  • Full tick market data can now be delivered into firms’ public cloud spaces to support certain use cases
  • Over time, as key public cloud challenges are overcome, more uses cases will be available

The move to the public cloud by the financial services industry is accelerating so quickly that soon entire financial instrument exchanges – for stocks, bonds, derivatives and more – could be operating there. At the moment, many exchanges are moving internal processes into the cloud, saving costs and other resources. In the future, with trades happening in the public cloud, low latency market data could be sent securely via data vendors to firms’ public clouds around the globe.

Financial services firms are on a similar journey to financial instrument exchanges, and are keen to benefit from bringing together market data and the cloud. For example, some analytics and back office use cases can be met by using a cloud-based conflated service such as the award-winning LSEG Real-Time – Optimized. However, other market data use cases require full tick data to be delivered into firms’ public cloud.  For example, the current LSEG Real-Time – Full Tick data solution delivers tick-by-tick market data from 90+ million instruments into firms’ on-premises location, co-lo or private cloud. Now, LSEG can also deliver Real-Time – Full Tick into firms’ public cloud.

LSEG Real-Time by the numbers

8 million Equity instruments, including indices and chains
36 million Commodities, futures and options
21 million Warrants, preferred stock, rights issues and fund data instruments
15 million Fixed income instruments
3 million FX and money market instruments
220 billion Messages per day processed and routed around the globe
550 Venue products and hundreds of OTC venues
150-200 New venues, venue upgrades and new content sets added each year

The vision for public cloud market data

Powering front office trading systems with full tick data at the right levels of latency and data quality remains the target. This would enable financial firms to dramatically reduce costs and optimise resources associated with managing and distributing real-time market data, while benefitting from improved scalability, flexibility and greatly reduced time-to-market. In addition, market data provided on a managed service basis to a firm’s public cloud would further reduce the in-house costs, and transform the nature of those costs from capital expenditure (CAPEX) to operating expenditure (OPEX).

The move to the public cloud by the financial services industry is accelerating so quickly that soon entire financial instrument exchanges could be operating there

Bill Jary, Director, Real-Time Strategy

Where are we now?

Many financial services firms have a mix of public cloud, private cloud, on-premises, and even a hybrid model for their real-time and historical market data, with data analytics in the cloud notably increasing. 

Security in the public cloud – once a genuine concern for firms – has improved significantly thanks to work done by the big cloud providers, such as Google, AWS, and Microsoft Azure.

Similarly, operational resilience in the public cloud has also become less problematic for firms, with increased redundancy and resiliency now seen as a key benefit.

Latency and jitter remain the challenge – at the moment, the public cloud is not able to deliver low and predictable latency. This is in part because the cloud hosting locations are usually not located near to exchange liquidity pools, with the physical distance increasing the latency. Data can only move so fast, and for ultra-low latency use cases every microsecond counts. Also, the ephemeral nature of cloud networking results in some packet loss, albeit very low levels. As a result, trading in fast-paced markets such as equities and liquid fixed income is still tomorrow’s goal.

Use cases for public cloud market data

Even so, public cloud real-time data could support trading in markets that are less latency sensitive, such as less liquid fixed income instruments and OTC derivatives. The public cloud is already used for digital asset and cryptocurrencies trading, although some firms that trade in these instruments are now building the kind of physical market data infrastructure needed to support ultra-low latency trading, which is an interesting twist in the development of those markets.

Although challenges remain, delivering LSEG Real-Time – Full Tick into the Public Cloud is an evolutionary step forwards, and it is appropriate for a range of use cases such as price discovery, back testing, many types of pre-trade analytics, and OMS/EMS systems. Small and medium-sized buy-side firms who have a cloud-first approach would find data delivered to their public cloud useful across their enterprise. Financial firms could also use LSEG Real-Time – Full Tick for artificial intelligence (AI) and machine learning (ML) projects too.

Market data in the public cloud is on a technology journey. Looking ahead, the public cloud will have a significant role to play in supporting the market data infrastructure of the entire financial services industry. Today, new capabilities to deliver full tick data into the public cloud take firms nearer to that vision.

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