A farmer in a remote corner of Brazil wondering about this year’s crop might step outside to study the clouds, all before making multiple calls to get a static snapshot on opaque grain markets.
But if he’s working with the Brazilian startup Grao Direto, he can reach for his smartphone and consult something better — the digital cloud where a wealth of market information awaits, the kind of data that only a few years ago was unimaginable for both producers and sellers.
It’s the kind of in-demand data that has grown exponentially in availability in recent years.
Founded in 2017, Grao Direto has developed a cloud-based app that connects grain buyers and sellers while offering a view of physical markets in real time, an epochal change from the days when producers had only a limited view of vital market information. In 2020, they partnered with CME Group to access market data in the cloud to support their business.
Data Clients Need Flexibility
From commodity trading, to stock investors, and in the crypto world, investors are increasingly turning to cloud-based technology to access vital market information in a timely and cost- effective way.
But according to some of its biggest proponents the trend toward the cloud may still be in its infancy as demand grows for ever more complex information flows.
“What we're seeing is a wide array of clients that are looking to exchanges to provide more flexible ways of accessing and interacting with the underlying data through analytics solutions,” Trey Berre, Global Head of CME Data Services, told a recent panel.
CME Group was the first derivatives exchange to offer a real-time, cloud-based market data product with the launch of CME Smart Stream in 2019. Clients gained access to its real-time data feed that ran on the Google Cloud Platform. In 2020 CME announced that clients could also tap delayed data through the cloud. Most recently at the end of 2021, CME announced a transformative partnership with Google Cloud to accelerate its move to the cloud and transform how global derivatives markets operate with the technology.
Today, CME Group has more than 25 partnerships with firms around the world to provide data through the cloud. Clients range from commercial firms to hedge funds, proprietary trading firms, retail traders and third-party providers.
Berre, speaking at a recent Coalition Greenwich event, said CME is dedicated to exploring how to make market data more customizable, along with making it easier to access the information.
“Our investments in the cloud can really align to our focus and the strategy of helping make it easier for our clients to do business with CME Group,” helping customers to “grow and innovate.”
Today some 93% of exchanges, trading systems, and data providers offer cloud-based products, according to a recent survey by Coalition Greenwich, commissioned by Google Cloud.
"What we're seeing is a wide array of clients that are looking to exchanges to provide more flexible ways of accessing and interacting with the underlying data through analytics solutions.”
— Trey Berre, Global Head of CME Data Services
The trend is led by buy-side firms, with nine in 10 connecting to the cloud for market data, according to the survey. Some 67% of sell-side concerns have gravitated to the digital heavens, and a whopping 88% intend to consume yet more data.
The cloud storage market, kept aloft by a trio of tech giants — Google, Microsoft and Amazon — is expected to grow by 25% a year to more than $150 billion annually by 2026, according to a report by Market Data Forecast.
Pandemic Transformed Demand
Cloud computing has been growing for some years now but the pandemic ushered in a new urgency because of the need for employees to work from home, making the office a geographically dispersed challenge.
“You don't have to be close to your servers. You don't have to be close to your market data These things can actually be available to you through the digital world and the physical doesn't matter anymore,“ Ulku Rowe, Technical Director, Financial Services, Google Cloud, told the Greenwich panel.
Ralph van de Klundert, co-head of data at Transtrend, an experienced systematic investment manager, said it opens opportunities for startup trading companies, which have long struggled to get data to clients in a way that is both manageable and cost effective.
"You don't have to be close to your servers. You don't have to be close to your market data. These things can actually be available to you through the digital world and the physical doesn't matter anymore."
— Ulku Rowe, Technical Director, Financial Services, Google Cloud
Before the onset of the CME cloud product, the company built a direct datafeed solution with CME Group. “That was expensive because there was a huge amount of data streamed into our office. It wasn't scalable, it wasn't the right solution, maybe not the right time.”
But now Transtrend has found the right fit by working with CME Group data services, with Google Cloud handling the digital infrastructure. “I think it’s very scalable, it’s very usable,” he said. “It’s pay as you go and that’s very unique. This solution can replace our existing data vendors in the future for our CME data use.”
Beyond Human Comprehension?
The race to the cloud with its terabytes of data can be mind-boggling when considering how the need for ever more intelligence has evolved over time. Market data has moved from chalkboards on the trading room floors to massive data centers. The programs to analyze the information must also keep pace.
“That data that used to sit on spreadsheet is now beyond human comprehension,” Google Cloud’s Rowe said at the Coalition Greenwich panel. She said for clients to handle the massive information flow they need better analytics. The next level is Artificial Intelligence, the so-called AI tools, to help clients gather the insights they need to grapple with the tsunami of information.
Berre of CME Group said demand for deeper insight into the data is soaring. “Where we're seeing most of the demand today is on the buy side, or with some of our smaller, prop firms, or even increasingly more sophisticated retail traders, looking for the opportunity to execute individual strategies for more precise and deeper intelligence into the underlying data.”
Alexandre Borges, CEO at Grao Direto, has been awed by the leaps in innovation already achieved by cloud technology, which he said helped make small startups like his possible in the beginning. His company was formed by three childhood friends and only $10,000 in seed capital. Now its mobile app already has around 200,000 downloads, it employs more than 75 people, has a few million in fundraising with plans to continue growing exponentially supported by cloud technology.
“We were able to access the servers and the infrastructure that Google was offering because it was not expensive,” he said. “Imagine, being in Brazil, we were getting access to state-of-the-art infrastructure.”
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