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Cloud transforming FSI biz models

Changing business landscape pressuring financial institutions to change working methods, with cloud services identified as key enabler, says NYSE Technologies CEO.
Written by Jamie Yap, Contributor

SINGAPORE--The financial services industry (FSI) is at a tipping point where the old ways of doing business are no longer applicable and need to be transformed, with cloud computing identified as a key enabler of such change.

According to Stanley Young, CEO of NYSE Technologies, the commercial technology arm of NYSE Euronext, an industry transformation is at hand and this is necessary for what it means to be a stock exchange in the 21st century. He noted that the business environment had shifted with heavier regulations imposed on the industry and the "old ways" of doing business are no longer working, which in turn has led to shrinking commission pools.

As such, the company now includes cloud computing services in its portfolio of IT products, which target FSI customers such as dealers, brokers and asset managers, the CEO pointed out during the Hewlett-Packard (HP) Financial Services Industry roundtable organized here Wednesday.

The company's Capital Markets Community Platform aims to foster virtual trading spaces, "liquidity hubs", for broker-dealers to access exchange markets such as those in Tokyo, Singapore, Toronto and Chicago in a "secure, reliable and branded way".

Young previously told financial news Web site Securities Technology Monitor last November that NYSE Euronext aimed to create a global network of up to 40 liquidity hubs in data centers around the world. These hubs will be located in facilities operated by datacenter specialists and provide market access, market data and risk management services to banks and trading firms, he said in the report.

At his presentation today, Young added that in "the new world", NYSE Technologies functions as an agnostic platform provider, hosting services not just for its customers, but its competitors and their client pool as well.

"If our cloud product was to support only NYSE Euronext, [the endeavor] would have failed. This facility is open to our competitors like Goldman Sachs, recognizing and making them part of the ecosystem," he said.

The CEO also reiterated that incremental changes are not good enough anymore, and these new ways of thinking and doing business, such as its cloud initiative, are needed to effect transformation.

Commenting on NYSE Technologies' initiative, Larry Ryan, chief technologist for financial services industry at HP, who was a panel speaker with Young, said that the community cloud is an "example of a classic vendor moving to the cloud space as newer and smaller players come in to challenge existing ones".

Security a "huge" focus
Asked about the recent slew of hacking attacks such as the hacking of the Hong Kong stock exchange's Web site in August, Young pointed out that these attacks were on Web sites, and do not negatively impact the "safe, secure and separate Internet Protocol-based environment" in which actual trading takes place.

"There are major security exercises, layers of checks and validations. No one can just log in and hide there [to attack the system]," he said.

Of NYSE Technologies' cloud service, the CEO added that its system is designed for "highly secure and resilient" trading and transactions of billions of dollars in microseconds.

HP's Ryan added that security continues to be a "huge" focus for the IT vendor. He noted that as banks and financial institutions build their internal private cloud networks as well as utilize public cloud services, HP hopes to deliver its hybrid cloud and be the "one-stop shop" for these organizations' core banking needs.

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