Cloud Usage Favored for TCA: Survey

Terry Flanagan

Data storage and application services that are heavy users of data, such as backtesting and transaction cost analysis (TCA), are likely candidates for cloud deployment, according to survey results released by OneMarketData, a provider of tick data management and analytics.

The survey, which looked at current and planned cloud technology usage trends to support the quantitative research and trading process, also indicated that participants do not foresee the use of cloud technology to support trade execution.

“There is a clear indication that firms are ready to move research, model back-testing and TCA into the cloud,” said Louis Lovas, director of solutions at OneMarketData. “These survey results point to an expansion of the industry’s use of cloud technology for the computational scale it offers, though it seems clear that some functions, like trade execution, will continue to be run on proprietary infrastructure for the foreseeable future.”

Data storage topped the list of services most appropriate for cloud computing solutions. Large scale trade model back-testing, quantitative research and TCA/post-trade analytics were each chosen as cloud appropriate by more than 60 percent of respondents.

Considering the many benefits of the cloud, lowering costs had the greatest appeal for survey respondents. An impressive 96 percent indicated that the reduced costs associated with the cloud have driven adoption in the capital markets. The second biggest driver, according to 52 percent of respondents, is scalability of compute power.

“Most asset managers have adopted some form of cloud product or service. The most common are data centers, storage and application services,” said Mark Bednarz, director at Rothstein Kass. “Each asset manager should perform sufficient due diligence and evaluate their future needs before moving to the cloud. There are important risk issues which need to be evaluated when using cloud based models including security, performance, and cost.”

The market remains hesitant on the adoption of cloud services for trade execution, particularly on public cloud solutions. Almost three-quarters of respondents said they are not currently leveraging the public cloud for trading purposes, and only 13 percent said they consider cloud, public or private, as an appropriate technology model to support trade execution.

Nonetheless, an impressive 70 percent of respondents said cloud services have evolved to warrant consideration for use in the capital markets. An additional 75 percent of respondents said they expect to increase their use of cloud in the coming year.

The survey also revealed strong support for the three primary cloud models—IaaS, PaaS, and SaaS.
Infrastructure-as-a-Service (IaaS), in which users are provided a virtualized compute environment, was favored by 41% of respondents, followed by Platform-as-a-Service, which provides development services for in-house use (34%) and Software-as-a-Service, which provides access to existing vendor platforms (25%).

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