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The move is the latest among exchanges that have started to expand into cloud-based software and data analytics. Earlier this month, Alphabet Inc. struck a deal with CME Group Inc. to help the derivatives exchange operator move its data and clearing services to Google Cloud, then to trading and other markets.
Nasdaq will start trading in the cloud next year, starting with Nasdaq MRX, one of its options exchanges, according to a statement Tuesday. With time it intends to move more markets to the cloud through Amazon's web services.
Transferring capital markets to cloud-based platforms could help exchanges reduce costs and has been held up as a remote goal for years, but the technology challenges are enormous. Modern trading of stocks, Treasuries, Futures, and other assets is incredibly fast - with the pace sometimes measured in nanoseconds or billionths of a second - and exchanges try to make sure all market players get price updates and other vital data at the same time. Conventional cloud solutions aren't built to accommodate that.
Nasdaq and Amazon have co-developed a new platform that will live inside Nasdaq's primary data center in Carteret, New Jersey.
Tal Cohen, executive vice president and head of North American markets at New York-based Nasdaq, said in an interview that the roll-out will take place over a multi-step testing period to ensure existing Nasdaq customers are comfortable with the transition. He said that we will not migrate our markets if we think we are compromising on performance or security.
Nasdaq, a long-time Amazon Web Services customer, previously said that its markets would be transitioned to the cloud over the next decade. The deal underscores the success of Outposts, a two-year old bid to compete with Microsoft Corp., which has been touting its expertise in corporate data centers to win cloud clients.
AWS Outposts will extend AWS infrastructure, services, APIs and tools to virtually any datacenter, co-location space, or on-premises facility, according to the statement. Nasdaq plans to integrate AWS Outposts directly into its core network to deliver ultra-low latency edge compute capabilities. Cloud computing allows companies to outsource computer processing and data storage to big tech firms rather than to run the systems in-house. It is one of the fastest growing areas of the technology industry. Amazon is a leader in the space as well as Microsoft Corp. and China's Alibaba Group Holding Ltd.
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