e-Forex-July-23-HighRes-SCREEN

Become the Cloud:
How financial exchanges are
transforming their relationship
with Cloud technology
PUBLIC VS PRIVATE CLOUD
raised concerns over the sector’s
becomes more tailored to the specific
The financial sector’s hesitancy
reliance on a few Critical Third
characteristics of Capital Markets; nor
to embrace Cloud Technology is
Parties (CTPs) in the arena of fintech
does it enable growth.
well-known, and for good reason.
Questions of security, regulatory
requirements, data location
infrastructure. There is nervousness
over whether the hyper scale cloud
providers such as AWS, Google and
EXCHANGE TECHNOLOGY
REQUIREMENTS
sovereignty and preserving legacy
Microsoft will monopolize the financial
As innovative market participants test
systems all rear their head in digital
sector and threaten the role and
the digital transformation waters for
transformation considerations.
function of the Exchanges themselves.
the sake of increased agility, speed to
market and cost-effectiveness, the gap
Established financial institutions do
In response the Financial Services
between the capabilities of hyper scale
FINTECH
not wish to compromise their existing
platforms; while cutting-edge trading
organisations are looking to the cloud
for cost-effective infrastructure which
enables them to stay focused on their
and Markets Bill was brought before
Parliament in 2022, calling for a tighter
regulatory framework to apply to CTPs
providing infrastructure services into
the finance sector. This Bill is expected
cloud provision and finance-specific
technology requirements widens.There
are many ways in which public cloud
provision falls short of the rigorous
necessity for accuracy, simultaneity,
applications.
to achieve Royal Assent later in 2023.
security, and data sovereignty,
This is in parallel to the progress into
demanded by Capital Markets
This mix of requirements makes it
EU legislation of the similar Digital
trading environments. Public cloud
increasingly clear that there is currently
Operational Resilience Act (DORA).
access cannot give any low-latency
no public ‘one-size-fits-all’ network
By passing these acts, EU and UK
guarantees, so it is wise to consider
and cloud protocol that can satisfy all
regulators have recognised belatedly
whether the internet can provide the
participants.While public cloud offers
that outsourcing of core technology
carrier-grade connectivity required. For
affordability, ease of accessibility,
functions by financial services firms is
example, some financial applications
economies of scale, global coverage
here to stay.
do not work if the latency is above 5
and flexibility for non-mission-critical
milliseconds.
operations, vital features indispensable
However, given that the detail of
to financial institutions are not
how CTPs will be regulated is left to
In these cases, it falls to the
included. Consequently, the trade-
be resolved in secondary legislation,
infrastructure specialists in the sector
off between public and private cloud
there is a risk that increased regulatory
to resolve these issues through
solutions in Capital Markets keep
control of CTPs represents a rather
hybrid cloud, or ultra-low latency
participants, infrastructure providers
reactionary and unresponsive way
private environments custom built for
and regulatory bodies alike on their
to both safeguard and enhance
market participants requiring high
toes.
operational resilience in the sector.
levels of throughput and consistent
REGULATORY CONTROL
In a nutshell increased regulation
cannot move as quickly as the
nanosecond processing speeds.
In 2021 the supervisory authorities
technology and innovations currently
For example, PTP or better grade time
including the Financial Conduct
beginning to make themselves known
synchronisation, support for multicast
Authority, the Prudential Regulation
to the market; it does nothing to
across organisational boundaries
Authority and the Bank of England
ensure hyper scale cloud provision
and network-level traffic visibility are
62 JULY 2023 e-FOREX