By Matthew Lempriere, BSO Head of Asia Pacific, Middle East & UK
Increasingly today, and particularly in the wake of the Covid-19 pandemic with so many teams now working from home, financial institutions are adopting cloud-based solutions to satisfy a variety of their trading-related needs. However, one of the areas that have proved particularly challenging to migrate to the cloud is the distribution and consumption of real-time market data.
We explore new trends in cloud connectivity and the challenges involving market data.
Data access and delivery via the cloud
Firms have been able to access historical tick data via the cloud on a t+1 basis for some time now, for a variety of research and testing purposes, such as evaluating new algorithmic trading models, developing AI and machine learning applications to seek out new sources of alpha, running transaction cost analysis (TCA) and designing smart order routers (SORs).
The traditional method of delivering large historical data sets via physical delivery on disk or through FTP transfer is gradually moving into the 21st century, as an increasing number of exchanges such as CME and ICE, as well as data vendors such as Refinitiv and Bloomberg, are now able to offer those services via the cloud.
Cloud connectivity and market data trends and challenges
Challenges with market data on the cloud
Until recently, the cloud has not been considered an appropriate mechanism for sourcing real-time market data. Multicast, for example, remains problematic in a virtualised environment, as does guaranteed delivery with deterministic low latency, which is essential in any high-performance trading environment.
Although cloud providers and data vendors are working on solutions to address these issues, we are not there yet. So for the time being at least, firms that rely on low-latency market data for their trading algos will continue to source their market data using dedicated infrastructure, either on-premise or hosted in collocated facilities.
Real-time market data on the cloud
Despite these ongoing challenges, there is a continued interest in sourcing real-time – or at least semi-real-time – market data via the cloud. Across the financial markets landscape, firms use t+0 market data for a variety of purposes, not just to drive their trading algorithms. Pricing, risk, and analysis are all areas where market data doesn’t necessarily need to be delivered with ultra-low deterministic latency. And these are the areas where the cloud can offer significant advantages.
Firms are increasingly looking at how they can utilise the cloud to reduce their market data technology and infrastructure footprint in areas such as these, not only to reduce their costs but to realise some of the other benefits that the cloud offers, such as scalability, agility and speed-to-market.
Cloud connectivity for market data
This being the case, what are some of the issues around cloud connectivity for market data, and how can they best be addressed?
One of the key questions and challenges is how to securely interconnect between the various cloud service providers (CSPs) and existing on-premise or collocated facilities, and to do it with high availability, high performance and low cost?
Consolidating cloud solution providers (CSPs)
Luckily, BSO can help with these cloud connectivity issues. BSO offers a secure and high-performance connection to all major CSPs (including AWS, Google Cloud Platform, Microsoft Azure, Oracle Cloud Infrastructure and AliCloud) and can link those clouds with on-premise or collocated financial data centres around the world via our dedicated low-latency financial network.
Regardless of whether a firm is looking to migrate specific parts of its current market data infrastructure to the cloud, or whether it wishes to move certain elements from one CSP to another (whether in US, Europe or Asia), BSO is the only carrier that provides the ability to do that over a private, secure, high performance, low-latency network, built specifically for the financial markets. And because we don’t route anything via the public internet, firms gain all of the benefits of our secure private network, but with dedicated access into, out of, and between clouds.
BSO also offers managed services in many of the data centres where the CSPs reside. So if for example, a firm requires specific switches, servers or racks in any of those facilities, we can help with that, rather than the customer having to negotiate with the various cloud providers individually.
In conclusion, migrating market data infrastructure to the cloud can be a complex undertaking for any firm. But the cloud connectivity aspect can be made significantly less complex by working with a tech partner like BSO.
Book a free consultation today with our experts on firstname.lastname@example.org.