The document discusses how the capital markets industry is facing unsustainable costs in its existing model and must embrace cloud technologies and new delivery platforms. It notes that market data services delivery has not changed significantly in decades and relies on outdated on-premise infrastructure with high costs. The document argues that a transition to cloud-based market data services can help drive down costs, increase flexibility, and enable innovation through new technologies and delivery of integrated front-office applications. It presents the opportunity for both buy- and sell-side firms to realize benefits through a phased approach to cloud adoption.

1. Terry Roche
Principal, Head of FinTech Research
Stairway to the Market Data Cloud

2. 2
Capital Markets Current State
The existing cost model of Capital
Markets is Unsustainable

3. 3
Return On Equity
3
source: KPMG

4. 4
Capital Markets
 Holistic view is needed to unlock value and comply with
regulation
 Cost of regulatory compliance driving all budgets
 Data constantly shifting and growing exponentially year
after year
 Costs must be reduced
 New models to achieve differentiation must be embraced

5. 5
Capital Markets Sell Side Spending
-4.000%
-3.000%
-2.000%
-1.000%
0.000%
1.000%
2.000%
3.000%
4.000%
2016 2017
Sell Side Budget Trends
Sell Side Tier I Tier 2

6. 66

7. 7
Financial Services Market Data - IT History
 Financial Services was the first compute intensive online
industry
 Market data services:
 Created prior to PCs or the Internet
 There was no central organizing platform such as
Facebook
 IT services developed in Silos
 Different standards, interfaces, proprietary services and
organizations
 Limited change over the years

8. 8
Market Data Delivery
 Market data services delivery has not fundamentally
changed in a generation
 On premise data feed aggregation
 On premise data distribution platforms
 On premise infrastructure sourcing and support
 On premise location of applications
 On premise databases
 USD26bn annual spend for data dominated by two service
providers

9. 9
Market Data Distribution
 Market data distribution technology had been a
differentiating factor within a firm’s operations
 Maturity of the technology has driven this space to
become more of a commoditized overhead
 Vendor lock in remains an issue
 Specialized and often proprietary technical knowledge is
required
 Expensive to run and maintain
 Open source initiatives yet to see widespread adoption

10. 10
Step Change Transformation
 A step change transformation is needed to drive the industry
forward
 Adoption of Cloud
 Third Generation Platform delivered Services
 Utilities
 Machine Intelligence
 Blockchain
10

11. 11
Third Generation Platform
 Next Generation Platform Services Delivery
Cloud Based Combination:
 Mobile
 Social
 Real Time Data
 Big Data / Big Data Analytics
 Microservices

12. 12
Adoption of Cloud
 Decision makers and influencers buy into the benefits of cloud
 Capital Markets technology not yet fully ready for cloud
 Barriers more than technology
 Lowering the cost of Operations
 Empowering Innovation
12
“The financial world is one step behind
geeks in CA but we’re catching up...the
tech piece of buy side firms will be
very different this year than
last...cloud is happening whether we like
it or not” - HD of Global Operational
Risk, asset manager
“ROI isn’t only driver, our tech
could be obsolete or we have a
vision to execute” - Board
member, exchange
“Our technical operations expenses
have declined 4% since 2012 due to
our private cloud initiative... the cost
savings potential is massive.” - MD
(IT) Top Ten IB

13. 1313

14. 14
Cloud Services Partner
14
73%OF FIRMS
SPENT MORE MONEY ON
MANAGING THEIR CLOUD
IMPLEMENTATION THAN THEY
PREDICTED
Source: SungardAS/TABB Group
66%OF FIRMS
MOVE AT LEAST 1/3 OF THEIR
CLOUD INFRASTRUCTURE BACK
ONTO THEIR PROPRIETARY
PHYSICAL INFRASTRUCTURE
Source: SungardAS/TABB Group
Cloud Service Partner
must have clear and
complete understanding
of your business and
technology needs

15. 15
Cloud IAAS has improved
 Cloud Infrastructure As A Service offerings have
significantly matured over the past number of years
 Better resiliency
 Better monitoring
 Better security
 Better operations
15

16. 16
Views from the Buy Side
“The challenge is that while some embrace it, some feel like it will
threaten their job.”
MD of Data – Top 10 Buy Side
“I don’t see it as a job eliminator more of an opportunity for you to
learn new technology on a new platform. Either get on board or it’s
going to run over you.”
MD Infrastructure – Top 10 Buy Side
16

17. 17
Views from the Sell Side
“When you really think about it adoption of cloud delivered market data services should
not be seen as controversial. It can be said that Bloomberg and Thomson Reuters deliver
cloud based market data.”
MD Market Data Services – Tier 1 Sell Side
“Firms like mine have 100s of servers dedicated to feeding market data … it doesn’t need
to be structured this way. People in my position need to get over having kingdoms and
focus on supporting the firm.”
MD Infrastructure – Tier 1 Sell Side
“The challenge here outside of performance is that moving to lower cost options can
leave stranded costs making service delivery higher for some while it becomes lower for
others.”
MD Market Data Services – Tier 1 Sell Side
17

18. 1818

19. 19
Cloud – A multi-layered offering

20. 20
Market Data Cloud Basics
Universal Data
Aggregation
Collect and manage data
sources and distribution
Advanced API
Suite
API structure(s) for ease of
application integration
Client
Applications
Lower cost of ownership –
Enhanced flexibility

21. 2121

22. 22
Front office services going to the Cloud
 The capital markets community is clearly moving to cloud based
services
 EMS is moving to third-generation platform, cloud-based
solutions.
 Evolution of EMS to a multitude of tightly integrated end-to-end
services is allowing buy- and sell-sides to outsource entire front-
office tech stacks.
 Users of third-generation EMS save significant time and money,
no longer needing each change to be an IT project.
 New model saves on support costs, facilitating investment in
integrating new services rapidly.
22

23. 23 23
Breaking Down Walls to Cloud Services Adoption
Lower Cost
of Ownership
Service Level
Agreements
Data
Completenes
s
Flexible
Delivery
Options
Risk /
Compliance
Review a
MUST
Hybrid
Services /
Application
Environments

24. 24
Cloud Market Data Transition
 Only ultra-low latency use cases may be excluded from
consideration
 Opportunities to support development / operations environments
and then transition to production
 Start with exchange data and leverage standards
 Explore application cloud relocation opportunities to be supported
by cloud delivered market data services
 Begin to reduce on premises distribution infrastructure and
associated vendor cost and lock in
24

25. 25

26. 2626

27. 2727

28. 2828

29. 2929

30. 30
Conclusions
 The market place is moving toward cloud services for both front
and back office applications
 Maturation of Cloud Infrastructure As A Service enables new
service providers to operate with surety and high quality offerings
 Market data services are available and capable to be delivered
from the cloud
 Realize a more flexible commercial and technology infrastructure
to support new and legacy data needs
 Opportunity for a phased approach to realize benefits now and
transition to more efficient overall cost of ownership over time
30