Ollie Cadman, Chief Product Officer at Vela writes about unleashing the power of the cloud for market data.
Last month, before “social distancing” became part of our everyday vocabulary, I joined a panel discussion, hosted by FISD, alongside industry practitioners in the market data space. Our discussion centred around the pragmatic reality of market data in the cloud: what are the techniques and approaches that work, and what are the real-world case studies that can guide service providers, users and adopters forward. It was fantastic to see such different market participants ultimately converging on a common vision of the future!
It is abundantly clear that cloud adoption, particularly with respect to market data, requires far more than a “lift and shift” mindset to the technology migration of a market data feed. It requires an organised, methodical transition plan as well as a dynamic examination of the business model and proposition. A go-forward transition plan that involves developing new data feeds and services in the cloud is far more viable than a full lift and shift of existing feeds. In order to fully realise the business benefits associated with cloud adoption, we at Vela see a move towards on-demand subscription-based models.
Our discussion distinguished between the different preferred strategies and data sets that market participants should consider when deploying cloud solutions. For example, reference data, end-of-day pricing and historical tick data are all well understood, easy to migrate onto the cloud, and simple to generate analytics around this data. On the other hand, real-time data and the capabilities afforded by large-scale cloud data management and processing are where the real innovations will be seen.
With respect to low latency, and how it can be supported in the cloud, the focus right now is on deterministic latency, and on how bandwidth is managed. For example, unicast has ported well, but challenges have arisen with multicast. This is an area in which firms can look to use Vela’s low-latency normalised SuperFeed market data feed as an alternative to native feeds from the global exchanges.
It is interesting to see how far the conversation has moved beyond the questions of whether or not firms should adopt cloud-based market data solutions. Conversations are now about the value – in terms of business use cases – that can be added by cloud adoption, above and beyond infrastructure savings. Part of the reason for this has been the increased sophistication of cloud offerings. Cloud providers have come a long way in addressing the security and regulatory needs of their clients, although there are still challenges around controlling the flow of information. As a managed service provider, Vela undertakes annual reviews with our clients and feedback from these indicate that the cloud appears to be a more straightforward way to manage security concerns. Now, more than ever, where working remotely has become such a critical part of our lives, we are more reliant on having to access data securely from the cloud.
We concluded with a discussion of the considerations that market participants should take into account when developing their strategies around cloud adoption for market data. Strategies should be built on an understanding of the differences between public, private and hybrid cloud, the different cloud technology stacks, and how to leverage cloud capabilities. This is a fundamental principle in any cloud adoption strategy – the need to understand all the potential of the technology in order to fully unleash it.
In summary, when it comes to cloud adoption for market data, we are beyond pontificating about vague possibilities; we need to get our teeth stuck in, heads wrapped around the issue, and our collective sleeves rolled up whilst keeping our hands cleaned and washed – because well, you know…
This article was previously published by Vela, a client of The Realization Group, HERE
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