NYSE Euronext uses Public-Cloud Model to Launch a Community Platform for Capital Markets


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Transcript of a BriefingsDirect podcast from the 2012 VMworld Conference focusing on applying the cloud model to providing a range of services to the financial industry.

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NYSE Euronext uses Public-Cloud Model to Launch a Community Platform for Capital Markets

  1. 1. NYSE Euronext uses Public-Cloud Model to Launch aCommunity Platform for Capital MarketsTranscript of a BriefingsDirect podcast from the 2012 VMworld Conference focusing on applyingthe cloud model to providing a range of services to the financial industry.Listen to the podcast. Find it on iTunes/iPod. Sponsor: VMwareGet the latest announcements about VMwares cloud strategy and solutions by tuning into VMware NOW, the new online destination for breaking news, product announcements, videos, and demos at: http://vmware.com/go/now.Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast series coming to you from the 2012 VMworld Conference in San Francisco. Were here the week of August 27 to explore the latest in cloud computing and software-defined datacenter infrastructure development. Im Dana Gardner, Principal Analyst at Interarbor Solutions, and Ill be your host throughout this series of VMware sponsored BriefingsDirect discussions.It has been a full year since we first spoke to NYSE Euronext at the last VMworld Conference.We heard then about their Capital Markets Community Platform of vertical industry servicescloud targeting the needs of Wall Street IT leaders. [Disclosure: VMware is a sponsor ofBriefingsDirect podcasts.]As an early adopter of innovative cloud delivery and a groundbreaking cloud business model, wedecided to go back and see how things have progressed at NYSE. We will learn now, a year on,how NYSEs specialized cloud offerings have matured, how the business of the financial servicesindustry has received them, and explore how providing cloud services as a business has evolved.Were joined by Feargal OSullivan, the Global Head of Alliances at NYSE Technologies.Welcome to BriefingsDirect, Feargal.Feargal OSullivan: Thank you very much, Dana. Nice to be here.Gardner: Tell me how its going. The Capital Markets Community Platform, as we discussed, isa set of cloud services that youre providing to other IT organizations to help them better supporttheir companies and their customers. How have things progressed over the past year?OSullivan: Weve been very happy with the progress weve made over the past year. When weannounced at VMworld last year, we had just gone into early access for our first clients in ourdata center in the New York, New Jersey, Connecticut tri-state area, where we have all of our
  2. 2. US-based markets running the New York Stock Exchange Markets, the Arca Electronic Markets,and AMEX.That has since gone into production, has a number of clients on it, is being perceived very well by the community, and is really driving as a lynchpin of our strategy of building a global capital markets community. Since the success of that, weve actually progressed further, to the point of having deployed the same environment in a second data center that we own and run just outside of London, in a town called Basildon, which is where we run all of our European markets, the Euronext side of NYSE Euronext. We now have an equivalent VMware-based cloud environment and a range of ancillary services for the capital markets industry available in that location.Clients can now access, as a service, both infrastructure and platform capabilities in both of thosefacilities.Furthermore, weve extended to two other financial centers in the world, one in Toronto and onein Tokyo. Thats a slightly more stripped-down version of the community platform, but its veryuseful for clients who are really expanding the business and gone globally.Four locationsNow, we have those four locations up and running in production with production clients, so we are very happy with that progress. Gardner: Thats very impressive growth. In order to move this set of capabilities across these different geographies and in the data centers that you have created or acquired there has the whole software-defined datacenter model helped? I would think that in the older days -- 10 or 15 years ago withindividually supported applications on individual stacks of hardware and storage -- that thatwould have been a far more difficult expansion project.So what is it about the way that were doing things now in the modern data center thats allowedyou to build out so quickly?OSullivan: Clearly, the technology has advanced significantly from the old days. The capabilityaround virtualization on the the hardware server level with the VMware Hypervisors, and inparticular the vCloud service, gives clients their own control over their environment.Also on the networking side, its become much more viable for clients to actually deploy intoshared environment, still maintaining confidence that theyre going to get both the securityprofile that theyre looking for, as well as the performance capability.
  3. 3. We use the EMC VNX array with the FAST Cache capability to give a very stable performanceprofile based on demand. It allows different workloads, and yet each gets very good performanceand response time. So there are many components along the way. Also, management andmonitoring of these types of infrastructures have improved.Our clients have certainly seen that enhancement in the technology. The financial servicesindustry is unique in the way it leverages technology on two aspects.One, security profile is absolutely critical. Security isnt just around customer data, but aroundapplication development and tools of the trade, intellectual property that firms might have,trading strategies, different analysis, analytics, and other types of components that they developand build,. They feel theyre highly proprietary in nature and dont want to allow anybody to getaccess to them. So they place security extremely high on the list.The other unique aspect is performance aspect. Its a slightly different performance model fromyour typical sort of 3-tier web store type of environment. Financial services, first of all, pushvery high volumes of content through their applications. They need to do so in microseconds, orat least milliseconds, of response time and latency measurements, and they also most importantlyneed to do so predictably.With a big batch job of some kind, say a genetic folding job, you drop off a job, go away for 12hours, and you come back. A little bit of clearly inefficient processing time is not great, becausethat drags out the whole thing over time, but there is no sort of critical "need it here," "need itnow" requirement. So latency spikes are less of a problem.Latency spikesBut in our industry, latency spikes are a real problem. People look for predictive latency, so wehad to make sure that we applied a very tight security profile to our cloud, and a very highperformance profile as well.Gardner: So as youve expanded across different market regions and brought this into more ofyour portfolio for more of your customers, have you also increased the services? Last time, wetalked about some services that were very impressive, but how have you been able to build onthis cloud in terms of those value-added services that you deliver specifically to a financialclientele?OSullivan: Thats why we built our cloud, because there are many service providers who offervery valuable cloud capabilities that are based on core infrastructure and core computingcapabilities, and they do so very well. However, we consider ourselves a vertical industrycommunity. Were specifically focused on capital markets participants. We try to support andmake it cheaper, more cost-effective, and more readily accessible to a wider range of participantsto be able to get access to the markets.
  4. 4. So in our cloud and our community, we provide a range of platform and services that we haveadded. The core is "Come into our vCloud Director environment and access your computeinfrastructure." By the way, we have a Compute On Demand Virtual Edition, we also have aCompute On Demand Physical Edition for those cases where that latency issue is of the utmostimportance.Then, we provide clients with the value-added features that we know they need, because theyrein the capital markets business. The key one is market data. This is something that is absolutelycritical in financial services, because every trade, no matter what you are buying or selling,always starts with a quote. Even if you walk into the shop and you ask how much it would it befor a can of soda, they say its $1 or $1.20, whatever it is, and then you decide if you want to buy.So in the financial services industry market data is the starting point, the driver of all thebusiness. And the volumes on this, the sheer size of the content that comes down, is reallyoutstanding. Its at the point now that even if you were to just subscribe to all North Americanequities and options, youd need a 10-gigabit Ethernet pipe, and at points during the day, youreprobably using upwards of 8 gigabits of that pipe just to get all that content.Obviously, we can provide raw content, but weve added a range of services into our cloud andinto the community. We can say, "We can offer you a nice filtered market data feed, where youjust present us with the list of instruments you want, and we can add value-added calculations, doanalytics, and provide that to you."Weve also developed an historical market-data access service. So if you want to go back and testyour strategies against previous days of trading, back for many, many years, we have a databasethats deployed in the cloud. So you can query the database, load it into your virtual environment,and analyze and back-test your strategies.Weve added order-routing capabilities, so when you are ready to send your orders to the market,if you are a market maker yourself, you might go direct to our gateway. If youre a sponsoredparticipant, you might go through our risk-managed gateway, which would be sponsored by abroker.Or if you are just a regular buy-side firm, a money manager, you might use our routing networkand ask us to write your orders to the different brokers or the different markets, and we canhandle that. Those are either ends of the trade.Get the latest announcements about VMwares cloud strategy and solutions by tuning into VMware NOW, the new online destination for breaking news, product announcements, videos, and demos at: http://vmware.com/go/now.
  5. 5. Integration piecesOn Thursday, Im going to be presenting with VMware and EMC in one of the breakoutsessions about us moving up the stack to start offering more of the integration pieces of this.Were using the Spring environment and a range of other VMware tools, the GemFires and so on,to demonstrate a full trading system deployed in the virtual environment with the integrationtools -- all running hosted in our environment.Its more of a framework that were showing, but it provides platform as a service (PaaS), not justthe market data in, which is our specialty, and the order routing out. Once youre within yourenvironment, the range of additional tools makes it easy for you to develop and customize yourown trading tools and your own trading strategies. Thats something I will be talking about onThursday at 1:30.Gardner: Thats very interesting. It appears that what youve done here with your intermediarycloud is developed a fit-for-purpose value to such things as data services. Then, youve appliedthat to other value services like order services and now even integration services.I think its a harbinger of what we should expect in many other industries. Rather than a fire hoseof either services or data, picking and choosing and letting an intermediary like yourselvesprovide that with the value-add, seems to be more efficient and valuable.Looking at this as a value proposition, how has this been going as a business? Have you beenenjoying uptake? I know you cant go into too much detail, but has the reception in the marketsatisfied your initial or hopeful business requirements around this as a business, as a profit andloss center?OSullivan: The good news is that weve definitely had great progress here. We have a numberof clients in all of the locations I mentioned. Were continuing to grow. Its a tough environment,as you can imagine, both just in the general economy and in particular in the financial servicesindustry. So we expect to continue to grow this significantly further.We have been certainly very happy with the uptake so far. We knew that we were going out wellahead of everybody else and we were very keen to do so, because we see and understand thevision that VMware and EMC in particular have been promoting over the past few years. Weagree with it fully. We feel like were uniquely positioned within the capital markets industry asthe neutral party.Remember, were just a place where people go to trade. We dont decide what you buy or whatyou sell or how much it should be. We just provide the facility, the rules, and the oversight toensure an orderly market. We wanted to make it easier and more cost-effective for firms to getaccess to that environment.
  6. 6. So by providing all of this capability, we think were in a fantastic position now, that as more andmore firms continue to explore virtualization and outsourcing of non-business critical functions,which for a while used to be running on your own servers, but which are now nothing butoverhead.We see them moving more and more into the cloud. We expect over the next two or three years,that this is really going to explode. We intend to be there, established, fully in production, triedand tested, and leading the industry from the front, as we think we should be with the a name likethe New York Stock Exchange.Well-known brandThat’s a brand thats so well-known globally. Its the best place to trade. Its the most reliable andmost secure place to trade stocks, with the best oversight, and we want to apply that model to allof the services that we offer our clients.Gardner: Lets drill just a little bit down into the notion of being able to add on these services,whether its integration orders or data services. Is there something particular about thearchitecture that youve adopted that allows you to progress into these newer areas, maybe evenin the future delivering feeds through a different format, satisfying needs around mobile devices,say HTML5.Im not focused so much on the application that you will be pursuing, but the ability to pursuemore applications without necessarily a whole lot of additional infrastructure investment. Howdoes that work?OSullivan: The key for us was that we developed and built our own data center, which weoperate and manage. Its a unique environment in Mahwah, New Jersey. We also built anddeveloped our own in Basildon, just outside London. Those two facilities were built as Tier-4guided data centers to the highest standards of reliability and security. Every time I go there, Imamazed at the level of attention, the attention to detail that our engineers put into designing it tohandle all sorts of occurrences.The reason is that there is so much content created in these facilities. Traders gravitate towardsliquidity, and were a source of liquidity. Were probably the single biggest equity and optionsvenue in North America, so traders are attracted to be there.Given the electronic nature of the market, forgetting about high frequency trading, everything iselectronic. So rather than take applications and deploy them in Timbuktu or wherever you chooseto deploy your application, somewhere away from this facility and pay the expense of wide areanetwork connections and so on, it makes more sense to deploy your applications close to thecontent that you care about.If there is 8 gigabit bursts of market data on the network, why would you try to bring that 50miles away to your own office? Why not take the applications that process that data and deploy
  7. 7. them in there? With that sort of thought process in mind, we continue to build out a range ofvalue-added services that we think clients would require.Were also well aware that our main purpose in life is to be this neutral venue that createsmarkets and allows people to come and trade. So were never going to be the best person, thebest firm, or the best vendor at developing every possible requirement that every particularcapital market’s participant might need. Thats where our Global Alliance Program comes in.Ive been focused on working on our partnerships and ensuring that, as clients deploy into thecloud and they need market data, routing, risk management, back-office processing, andhistorical analysis. They also need different types of analytics, and they might need otherservices like email archiving and storage. They need to comply with regulation and so they needregulatory reporting services.Not genericThere is such a wide range of capabilities required that are very specific. Theyre not generic.Youre not going to go to some telco provider’s cloud and have all these firms that can offer youall these services there. There needs to be enough potential clients before a vendor is going towant to deploy their applications in this environment.So were building this community. Were basically saying that we have over 2,000 firmsconnected to our network, hundreds in our data centers. We have a wide range of vendors andwere continually working to add more so that it can offer services to those firms.You can use our infrastructure, our cloud, and some of the integration capability that wevedeveloped, both ourselves and through our relationships with vendors like VMware and EMC, toadd on these capabilities that the firms are going to need and make a one-stop shop, acommunity, a place where you can go to get all the applications needed, similar to the app storemodel.Gardner: Youve defined what we should expect for public-cloud services. There is somethinking in the marketplace that there will be two or three public cloud providers, and everyonewill go there, but I really think you have defined it by having a community close to theircustomers, recognizing that the architecture and the association with data and the integration isessential. Then, that value-add for applications and services on top of that means an ecosystem ofcloud providers and not just a handful. So I really think youve painted the picture of the truefuture on cloud.OSullivan: Thank you. We certainly see it that way. Our clients have taken us up on it already.While we still think its early days, were confident that were going in the right direction, andthat this will definitely, definitely take off in a big way, and within five years we will be lookingback at how quaint this conversation was.
  8. 8. Gardner: I really enjoyed speaking with you, Feargal. We have been talking about the successof specialized vertical industry cloud delivery models and how they are changing the IT game insuch mission critical industries as financial services.I would like to thank our guest, Feargal OSullivan, the Global Head of Alliances at NYSETechnologies. Thank you, sir.OSullivan: Thank you very much, Dana. I really appreciate the time to speak with you.Gardner: And I also thank our audience for joining this special podcast coming to you from the2012 VMworld Conference in San Francisco. Im Dana Gardner, Principal Analyst at InterarborSolutions, your host throughout this series of podcast discussions. Thanks again for listening andcome back next time.Get the latest announcements about VMwares cloud strategy and solutions by tuning into VMware NOW, the new online destination for breaking news, product announcements, videos, and demos at: http://vmware.com/go/now.Listen to the podcast. Find it on iTunes/iPod. Sponsor: VMwareTranscript of a BriefingsDirect podcast from the 2012 VMworld Conference focusing on applyingthe cloud model to providing a range of services to the financial industry. Copyright InterarborSolutions, LLC, 2005-2012. All rights reserved.You may also be interested in: • VMware CTO Steve Herrod on How the Software-Defined Datacenter Benefits Enterprises • Case Study: Strategic Approach to Disaster Recovery and Data Lifecycle Management Pays Off for Australias SAI Global • Case Study: Strategic Approach to Disaster Recovery and Data Lifecycle Management Pays Off for Australias SAI Global • Virtualization Simplifies Disaster Recovery for Insurance Broker Myron Steves While Delivering Efficiency and Agility Gains Too • SAP Runs VMware to Provision Virtual Machines to Support Complex Training Courses • Case Study: How SEGA Europe Uses VMware to Standardize Cloud Environment for Globally Distributed Game Development • Germanys Largest Travel Agency Starts a Virtual Journey to Get Branch Office IT Under Control