DJ Nasdaq Ramps Up Cloud Move

By Sara Castellanos

Nasdaq Inc. plans to migrate its markets to the public cloud over the next decade, a move that was planned before this year but validated in part because of the coronavirus pandemic.

Several of Nasdaq's 28 markets in North America and Europe will be hosted in the public cloud in about five years, with all of its markets expected to migrate over the next decade, said Brad Peterson, the New York-based company's chief technology and information officer. The markets are currently run on-premise in data centers.

Cloud-computing providers have emerged as among the few corporate winners in the coronavirus pandemic as more activity has been pushed online. Public cloud vendors such as Amazon Web Services and Microsoft Azure offer remote data storage and processing services for enterprise customers.

Among the advantages of the cloud, customers say, is that it enables businesses to scale applications and services more efficiently and quicker than if they had to do it manually on their own servers. "The real benefit is the ability to scale and introduce new features," Mr. Peterson said.

Scalability was a major advantage for Nasdaq when the pandemic hit earlier this year and messaging traffic surged amid increased demand for orders, quotes, trades and other market data, Mr. Peterson said. In March, Nasdaq repeatedly saw daily peaks of more than 100 billion messages being sent and received in the U.S., more than twice the volume of the previous record. The message volume was so high because of the volatility and an increase in buying and selling activity on Nasdaq's markets.

But because Nasdaq's data warehouse for the U.S. and Canada had earlier migrated to Amazon Web Services from its own data centers, the cloud was able to handle the increase in traffic.

The Nasdaq Stock Market is hosted in the company's own data centers, and technology staff did have to manually add more capacity to the exchange in March, Mr. Peterson said. "It just demonstrated how much more difficult it is to [add] capacity when you're relying on a traditional infrastructure versus cloud," he said.

Global information-technology spending is projected to reach $3.5 trillion in 2020, down about 7% from 2019, but the public cloud services market is a bright spot this year, according to technology research firm Gartner Inc. The world-wide public cloud services market is forecast to grow 6.3% in 2020 to a total of $257.9 billion, up from $242.7 billion in 2019.

Nasdaq's coming migration of its markets to the cloud follows the trend of other major cloud shifts among enterprises, said Sid Nag, vice president and cloud analyst at Gartner.

Companies are realizing it is much more affordable to rely on cloud services rather than over-provisioning their own hardware in case they eventually need additional storage or computing capacity, which is often a large capital investment, Mr. Nag said.

Cloud services became more important during the pandemic because it was difficult, if not impossible, for some IT staff to physically access on-premise data centers, which power many important applications for enterprises, he said. Some companies had no choice but to move applications to the cloud, he said.

Mr. Peterson and Nasdaq Chief Executive Adena Friedman meet every two weeks with various business units and cross-functional groups to make sure their cloud efforts are accelerating this year.

The cloud can be scalable to any level of activity and accessible by users from anywhere in the world, which is becoming more important now, Ms. Adena said in an April earnings call. "We view that to be even more critical in a world that likely considers a much wider spectrum of business continuity scenarios than it ever has before," she said on the call.

Nasdaq has been using cloud services to host some of its applications for about a decade. For example, Nasdaq Precise, a platform where traders access Nasdaq's options markets, recently migrated to Amazon Web Services.

Market customers will be able to develop new computer models more easily using cloud-based tools for data analysis, such as risk calculations that are computing intensive, he said. "Doing that with traditional on-premise hardware [is] limited," Mr. Peterson said.

All of Nasdaq's markets are expected to be hosted in the cloud within the next decade, Mr. Peterson added.

Nasdaq's 28 markets include six equity markets in North America such as the Nasdaq Stock Market, as well as six equity derivative markets, the Nasdaq Baltic and Nasdaq Nordic markets, as well as fixed income and commodity markets.

Write to Sara Castellanos at sara.castellanos@wsj.com

(END) Dow Jones Newswires

September 15, 2020 17:50 ET (21:50 GMT)

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