Why a Move to the Cloud Enables High-Performance Trading and Execution | The Financial Technologist

2 Minutes

Download your free copy of the latest Financial Technologist magazine here.Cloud platfo...

Download your free copy of the latest Financial Technologist magazine here.

Cloud platforms are the go-to for FinTech start-ups, driving and supporting innovation in financial markets. Traditional financial trading firms, from exchanges and data vendors to brokers and hedge funds, are starting to embrace cloud computing for their trading platforms and infrastructure, in a bid to benefit from greater scalability and reduced costs. Jeff Mezger, Vice President of Product Management at TNS, considers the challenges of embracing the cloud for mission-critical trading infrastructure.

Firstly, firms need the right people with the right skills to facilitate an effective cloud transition. Public cloud environments can be cost effective to put data in and keep it thereHowever, when it comes to extracting or migrating the datait can be expensive. Therefore, a clear strategy that considers the nuances of the different cloud models (public, hybrid, private, etc.) is imperative. Firms need to understand how to operate in a business-as-usual capacity, navigating a continually changing regulatory environment, while simultaneously adopting cloud. If this is not a core competency, valuable time and in-house resourcemay be used up trying to figure it all out.

Public cloud services are great for big data analysis and for storing, moving, and managing large amounts of data. This can enable financial firms to make more informed trading decisions through effective data analysis. The public cloud is also good for transferring large volumes of data between say London and New York, and for supporting adherence to different regulatory requirements, by enabling near real-time monitoring of trading activity. The nature of cloud-delivered services also enables ‘dial-up’ resourceon demand ensuring greater operational resilience.

Why does latency matter?

However, it is important to understand that the cloud is not one thing. Underpinning any cloud environment are physical locations, so understanding that there is a geographic element to any cloud offering is fundamental. Most trading strategies require rapid execution, which requires low latency market access and a minimised number of hops. Many factors can affect low latency trading, especially hardware location, the number of network hops, deterministic network latency, the hardware specification, resiliency of an infrastructure’s architecture, including both the scale and power of network connectivity. Several public cloud providers currently struggle to accommodate the needs of low-latency electronic trading and the co-located infrastructure required by electronic traders. As a result, many trading firms currently use public cloud for less latency-sensitive purposes, like risk management, data storage, modelling, and development work.

Do managed solutions offer cost savings?

TNS Cloud Server Management, is an end-to-end solution that aims to bring the benefit of cloud to lowl atency trading infrastructures and co-location environments. It delivers a full-suite of trading infrastructure and support to buy-and sell-side institutions and their vendors. Designed for high-performance exchange trading, utilising TNS’ bare metal servers and ultra-low latency trading connectivity, TNS Cloud Server Management combines the company’s Dedicated Server hosting capabilities with hands-on server management. This helps to dramatically reduce clients’ trading center complexity and costs, allowing firms to focus their human resources on mission-critical business goals and go-to-market opportunities.

“Previously trading organisations typically outsourced cloud data center services, but still had to manage their own server resources. Server Management, paired with our co-location capabilities, reduces complexity by providing both infrastructure and end-to-end server management.” 

Jeff Mezger, Vice President of Product Management at TNS

Financial institutions need to be strategic in their approach to transitioning to the cloud, to maximise the benefits and continually review and revise their adoption decisions. Trading firms need reliable connectivity and performant market data feeds to drive their trading applications. Working with specialist companies that build shared networks and co-location footprints, offering access to market data and trading connectivity on demand, is an efficient and effective way of achieving this; by using these shared infrastructure services, firms get the benefits of expertise and technology, at a fraction of the cost of doing it for themselves.

Cost savings and economies of scale will also be front of mind for many firms in 2024 and can often be difficult to achieve when going it alone. TNS recently acquired West Highland, so have expanded capabilities to also help clients to reduce the cost and complexity of their market data infrastructure, including middleware, applications, and licensing and commercial management. 

Jeff Mezger is Vice President of Product Management at TNS with responsibility for its managed services for the financial industry. He oversees product development and strategy for market data, online and data centrservices.

Download your free copy of the latest Financial Technologist magazine here.

Site by Venn