The Nasdaq stock exchange was founded in 1971 as the world's first electronic stock market, and over the last 50 years it has aimed to stay on the cutting edge of digital innovation.
The cutting edge of innovation is now happening in the cloud, which is where Nasdaq is firmly headed. In a session at the AWS re:Invent conference in 2021, Adena Friedman, CEO of Nasdaq (pictured), outlined how Nasdaq is currently using the cloud and how it plans to use it in the future.
Nasdaq's Size and Scale Requirements
A primary requirement for Nasdaq is low latency, as time is quite literally money. End-to-end order processing on the platform, Friedman said, occurs in 20 microseconds or less.
"To put that in perspective, that's 10,000 times faster than the blink of an eye," she said.
Massive volume is another hallmark of Nasdaq. On any given day, Nasdaq’s systems manage 3 million messages a second, according to Friedman. Beyond its namesake stock exchange, Nasdaq also provides software-as-a-service (SaaS) applications to the broader capital markets ecosystem, serving corporate clients, investment management clients and banks, she said.
Nasdaq's History in the Cloud
Nasdaq is not a newcomer to the cloud. In fact, it can trace its usage back to the earliest days of the cloud.
In 2008, Nasdaq launched a product called Market Replay, which enabled users to replay a full market day and every single stock down to the millisecond, Friedman said.
"So it was a perfect early application for the cloud, with a lot of data, but not a real-time application," she said. "We received our first bill from AWS, and it was like $20, so we knew we had a really good relationship going."
Over the last five years, Friedman said Nasdaq has been focused on bringing market services to the cloud. It's a journey that started with a class of technology she referred to as surrounding systems. Those are systems that include data distribution, revenue management and regulatory reporting, among other systems that are foundational to well-functioning markets.
The confidence that Nasdaq has developed with its surrounding systems in the cloud has grown over the years, and in 2022 the financial services giant is set for its biggest move to the cloud yet – the matching engine, the technology that changes an order into a trade, will be moving to AWS, Friedman said.
"We only wanted to take this journey when we were confident that we could do it while maintaining or even improving the latency resiliency of our markets," she said. "Now through our engineers’ deep engagement with AWS, we know we are ready and we are going to start this new phase with our U.S. options markets."
The plan is to add other market services over time, as Nasdaq works through issues with its clients, regulators and other constituents.
Partnership Is Key to Cloud Success
With the size, scale and performance requirement that Nasdaq has for its operations, working with off-the-shelf capabilities wasn't going to be enough.
Its partnership with AWS to solve complex technical challenges has been critical, according to Freidman.
"Over the past two years, we've worked with AWS, and together we have pioneered the creation of ultra-low-latency edge compute systems that are designed specifically for the capital markets," she said. "Leveraging the hybrid cloud capabilities of AWS Outposts, we can now bring the edge directly into our primary data center in Carteret, New Jersey, creating the first ever capital markets private local zone."
AWS Outposts is a hybrid cloud offering that enables organizations to run cloud services on-premises. The plan to move more of Nasdaq’s systems to AWS involves having AWS cloud capabilities inside Nasdaq’s own data centers. The goal is to also bring the same services to Nasdaq’s broad ecosystem of partners.
"It is our responsibility to investors and to corporate issuers to continue to advance the markets to make them safer, more accessible, more global and more affordable," Friedman said. "Our ambition at Nasdaq is to become the first financial marketplace and solutions provider that is 100% cloud-enabled."