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The future of cloud and NYSE Euronext’s capital markets community platform

NYSE Technologies (a unit of NYSE Euronext) announced their new “community platform” cloud computing service today, running on vSphere and vCloud Director from VMware. The target customers for the service are capital markets organizations such as hedge funds and the trading departments of banks, with initial customers including a unit of Goldman Sachs and the hedge fund Millenium Partners.

Customers of the new cloud compute service get credentials for the infrastructure portal (vCloud Director) with access exclusively through NYSE’s SFTI (Secure Financial Transaction Infrastructure), a dedicated, secure and high capacity network. There they can deploy a choice of virtual machine (VM) templates on demand to run their capital markets applications. The service ensures that the VM is automatically “plumbed in” to NYSE’s multicasted real-time market feeds & applications, SFTI network, and high performance EMC VNX storage. The net? Customers can focus on developing proprietary advantage with their applications instead of worrying about the plumbing. Both dedicated and multitenant versions are offered, with tenants being securely segregated using vCloud Director’s Virtual Data Center (VDC) capability.

NYSE’s service is innovative in several ways. NYSE Euronext is primarily known for being a financial exchange as well as a provider of market data, rather than as a cloud provider. So why start offering cloud computing? NYSE saw how it could significantly simplify and improve its customers’ competitiveness in capital markets by providing an integrated service that combined on-demand computing with access to the market (the exchanges), a low-latency secure network and instant access to data feeds. In a reversal of traditional approaches to IT, computing capacity is literally coming to the market and the data — rather than the data and market being piped to the computers.

So, why is this better, and why is NYSE Technologies the right organization to deliver? For hedge funds and other buy-side firms, their value isn’t in integrating compute, storage, networks and security — it’s in analytics, trading strategies, algorithms, application strategies and other proprietary expertise. The NYSE service means those IT organizations no longer have to struggle with integrating data dumps and feeds into their infrastructure and operations. Trade execution speed can be critical, so physical location and proximity to the market matters. NYSE’s experience in operating large scale, mission-critical VMware-based infrastructure — the NYSE and Euronext exchanges — is unquestionable.

The cloud infrastructure involved is anything but commodity: trading applications require high performance, high throughput, strong security and sophisticated network connectivity. It’s the integration of this with all of the other critical infrastructure components, data, markets and other services that delivers the value. So what’s controversial about this? Recently, cloud pundits have trumpeted what seems to be a depressingly grim dystopian view of the future where all computing runs on vast monolithic “no-frills” VM farms at rock-bottom prices. In this world, any differentiation or variation in infrastructure is sacrificed on the altar of lowest possible cost per VM. After all, profitability at huge volume can only come from ruthless standardization.

In contrast, NYSE represents an alternative cloud future: one that contains a vibrant ecosystem of clouds, both internal IT departments and external cloud service providers, with unique understanding and focus on customer needs, married with the ability to deliver through scalable, on-demand and trustworthy IT services. What internal IT organizations and cloud providers like NYSE share is a rejection of the concept of an inflexible cloud monoculture. Instead, they choose to build high performance, secure and scalable infrastructure because it meets critical business needs. They obsessively focus on value delivered to the customer and never confuse that with cost of service.

In some ways, IT infrastructure is like a currency — the only qualification required is that it is accepted as such by its users. Building IT infrastructure that doesn’t meet customer needs leads to irrelevance and adoption of a foreign currency. There’s no one size fits all answer, which is something to consider when crafting your own cloud strategy and selecting cloud providers to compliment your own IT skills and capabilities.