- Nasdaq launched a range of cloud initiatives in recent years and partnered with tech giants like Microsoft.
- Recent cloud offerings include real-time data streaming and cloud-based matching services.
- The exchange’s embrace of the technology has been a marker for the rest of Wall Street.
- Because of her work, Insider named NASDAQ CEO, Adena Friedman to our annual list of the 10 leaders transforming finance in North America.
- Visit Insider’s Transforming Business homepage for more stories.
Since becoming Nasdaq’s CEO, Adena Friedman has set her sights on what’s become one of the biggest tech projects on Wall Street: a complete transition of Nasdaq’s operations to the cloud.
Friedman spent more than 11 years at Nasdaq before leaving to join the private-equity giant Carlyle Group as its CFO in 2011. She returned to Nasdaq in 2014, and spent time as president and COO before ultimately becoming CEO in 2017.
Since taking the reins, Nasdaq has announced a wave of cloud developments, outpacing most Wall Street players that, bit by bit, are themselves starting to embrace cloud technology. Brad Peterson, Nasdaq’s chief information and technology officer, told the Wall Street Journal last September that all of Nasdaq’s markets would move to the cloud over the next ten years.
Nasdaq’s adoption of the cloud is emblematic of a concerted effort led by Friedman to tap into what she called the “infinite scalability” of cloud technology at a February webinar hosted by the Economic Club of New York.
It’s a particularly salient issue given the exchange saw historic levels of trading last March at the onset of the COVID-19 pandemic.
“The engineering challenges that we face as a company today are fundamentally different than they were back in the ’90s,” Friedman said.
Cloud-based data streaming and trade matching
One of the first public-facing cloud developments at Nasdaq involved, of all things, content streaming.
In 2018, Nasdaq began streaming content to its famous Times Square video tower via the cloud through a partnership with public-cloud provider Microsoft Azure and announced the rollout of a similar service in four other offices globally.
A key focus of Nasdaq’s cloud development has also centered on big data.
In 2019, Friedman said at an industry conference that she envisioned cloud-enabling firms across finance to better leverage the vast reams of traditional — and alternative — data that underpin financial transactions and the decisions of the world’s largest hedge funds and companies.
Just over a year later, Nasdaq announced that it would begin streaming real-time data via the cloud for the first time with the launch of Nasdaq Cloud Data Services. At the time, Lauren Dillard, Nasdaq’s head of Nasdaq’s global information services, told Insider that ideal early-use cases might involve fintechs, since high-frequency trading firms still rely on hardware that can get them information the most quickly.
But even that trend might change soon, according to Friedman, as cloud-tech develops to not only handle big data sets, but do it quickly.
“Where the cloud has not yet kind of gotten to a perfect place is on dealing with it in an ultra, ultra-low latency environment, but it’s moving along that spectrum so that getting to an ultra-low latency, but also just infinitely scalable environment, is becoming possible,” Friedman said at the February webinar.
Nasdaq launched its first cloud-based matching service in 2019 (order matching, or pairing a buyer and seller together, is the lifeblood of any financial exchange) and, less than a year later, announced the launch of a new, cloud-based software-as-a-service product that customers can drop into their own services.
The offering is built to handle what Nasdaq calls every stage of the “transaction lifecycle” — from the issuance of a security to trade matching and market surveillance.
A spokesperson for Nasdaq said it has seen a range of interest from customers outside of traditional finance – such as insurance, real estate, and sports — alongside the rollout, Nasdaq also said it was partnering with Microsoft Azure to launch a set of services aimed towards digital asset companies.
There’s no indication that Nasdaq is slowing its cloud adoption. Instead, as the exchange highlighted in a recently published report on tech trends, Nasdaq is eyeing the next generation of the tech: edge computing.
Ideal for when data is more decentralized, edge computing analyzes data closer to the point of collection and consumption, thereby lowering latency.
The tech could mean finance starts to see even more forms of alternative data, like that collected from roads to gauge traffic flows. But crucially for Nasdaq, “new, emerging marketplaces could leverage edge cloud to run their matching engines as well,” according to the report.
Data sharing tools to combat fraud and money laundering
Just this April, meanwhile, Nasdaq announced a partnership with Intel to begin exploring advanced encryption techniques, made possible by the scale and speed of cloud computing, that will enable Nasdaq to perform data analytics on large data sets without ever having to decrypt them first.
The technology could potentially address the security concerns some market participants have over public cloud tech, and allow Nasdaq to gain an edge in combating money laundering and financial fraud, Nasdaq said at the time.
Since the encryption technology is ostensibly more secure, it could potentially allow for greater data sharing between market participants that previously might have seen little regulatory benefit – and much scrutiny from customers – in working together. It was a benefit highlighted by Friedman at the Economic Club of New York forum.
“We’re really, really excited about that, and also recognizing that anti-money laundering and market manipulation and other things like that, the banks are starting to figure out how they want to tie those protection capabilities together and integrate those solutions,” Friedman said.
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