Nasdaq CIO prepares to shift financial markets to the cloud

The COVID-19 pandemic convinced Nasdaq CIO Brad Peterson that the cloud is ready to meet the can't-fail technical demands of the global markets. So, in 2022, Nasdaq will start moving its North American exchanges to AWS.

"When everything heated up in March of 2020, the things that we had already moved to the cloud were able to flex so much easier than what we had to do to add capacity [on-premises]," Peterson said. "It turned out to be a good proof point."

Last week, Nasdaq announced at re:Invent that it is working with AWS to move its North American markets into the cloud, beginning with the U.S. options trading technology Nasdaq MRX. The plan indicates a higher degree of confidence in cloud technology than the financial services industry had previously displayed.

Brad Peterson

In an interview with TechTarget, Peterson said cloud resources could scale computing power up or down to deal with unexpected surges in trading. That resilience, combined with the same-or-better latency and security, were the major factors driving the decision. Another cloud benefit was lowering expenses by replacing depreciating on-premises equipment.

Now that the cloud has proven its maturity to Peterson, he said he wants Nasdaq to be at the forefront of cloud adoption to serve as a template for the market technology it sells to business customers.

"This is a great way for us to show confidence in the product, show the product's ready because the US markets are some of the most demanding in the world," Peterson said.

In preparation for the shift to the cloud, Nasdaq has started moving markets -- including MRX -- onto a platform called Fusion. The exchange designed Fusion to support a phased transition to the cloud and manage risk.

Peterson's top piece of advice for other enterprises looking at transitioning into the cloud was to go with a provider with whom they have a relationship, who understands their business and tech needs. Nasdaq and AWS have worked together for 13 years, and the cloud provider hosts Nasdaq's revenue management system for U.S. and European markets, and some market analysis functions.

Peterson cautioned against the traditional software development wisdom of first working on the most challenging workloads.

Understand that after you move things to the cloud, there's a phase of optimization and tuning.

"Understand that after you move things to the cloud, there's a phase of optimization and tuning. It's really important for you to have that learning phase," Peterson said. "A lot of times, folks think they're going to move it to the cloud and just leave it."

Instead, developers should get some easier wins under their belts while getting a sense of the cloud's capabilities and limitations. Peterson said a critical challenge so far has been rethinking the design of non-cloud applications to ensure that they can take full advantage of its benefits.

"People will lift and shift applications, and they won't necessarily get all the benefits -- the application won't be structured, for instance, to horizontally scale," Peterson said. "There's a lot more resources [than there used to be] that are capable of doing the engineering up front, before you move into the cloud, which saves activity, saves work and gets you to a better spot from Day One."

Interest in running mission-critical workloads in the cloud is growing in the financial services industry and more broadly. Goldman Sachs recently teamed up with AWS to launch a Financial Cloud for Data, a tool that uses Goldman Sachs' AI and AWS's cloud computing power to help clients analyze financial data. Meta, formerly Facebook, announced during the re:Invent industry conference last week that AWS would be its long-term strategic cloud provider. Meta said it would continue running on AWS future acquisitions on the service.

"The partnerships that are coming out align very much with where Amazon has strength in its cloud business," said Richard Villars, an analyst at IDC. "The investments [Nasdaq has] been making through their outputs platform, their computing architectures and the security elements clearly showcase that Nasdaq feels like [AWS cloud] is mature to a level that this is a platform they can build on."

The next step in Nasdaq's shift to the cloud will be installing AWS Outposts, the cloud provider's on-premises IT-as-a-service platform, in Nasdaq's primary data center in Carteret, N.J. AWS and Nasdaq have developed ultralow latency edge compute systems that will eventually create the first private AWS Local Zone for the capital markets industry.

Nasdaq's ultimate goal is to be 100 % cloud-enabled, said Nasdaq CEO Adena Friedman at AWS re:Invent last week. The company has not disclosed a timeline for that goal.

Madelaine Millar is a news writer covering network technology at TechTarget. She has previously written about science and technology for MIT's Lincoln Laboratory and the Khoury College of Computer Science, as well as covering community news for Boston Globe Media.