TECH TUESDAY is a weekly content series covering all aspects of capital markets technology. TECH TUESDAY is produced in collaboration with Nasdaq.
At AWS Re:invent in 2021, Adena Friedman, President and Chief Executive Officer of Nasdaq, announced that the group would begin migrating markets to the cloud in 2022 and build the world’s first capital markets AWS Private Local Zone alongside its New Jersey Data Centre campus.
At the same event in 2022, just one year later, Marc Murphy, Senior Vice President at Nasdaq, took the stage to announce that the migration of MRX, a U.S. options exchange, was well underway. At the time of the conference, more than one billion messages flowed through MRX using AWS cloud technology. The migration has since been completed as of December 5, 2022.
He described Nasdaq as having disruption and pathfinding in its DNA since launching the first electronic exchange in the world. The firm owns and operates over 30 exchanges in 10 countries, and its technology powers 130 market infrastructure providers in 50 countries – including exchanges, CCPs, CSDs and regulators — globally. Hence, it is responsible for ensuring that it provides modern and accessible platforms, and those customers can always access liquidity.
Since Friedman announced Nasdaq’s cloud journey in 2021, many clients have highlighted appreciation for Nasdaq’s long-term vision to transform the future of the capital markets, making them more resilient, scalable and accessible for all market participants. He further emphasized AWS’ role in the transformation.
“Clients appreciate that the unique solution Nasdaq and AWS jointly brought forward allowed us to be additive to the current ecosystem and bring the power of the cloud to them,” Murphy added. “With this approach, we can accelerate innovation, both for ourselves and our clients, and AWS will help us power that.”
In moving a matching engine to the cloud, the challenges include migrating not only the technology built over decades but the operational model surrounding it, the need to maintain critical ultra-low latency with determinism and the regulatory requirement to maintain system availability and uptime.
“Regulation requires that we have fair and orderly message flow through the system, and we need determinism in an industry where nanoseconds matter,” said Murphy.
George Smith, Principal Solutions Architect at AWS, emphasized the cloud provider has been working with Nasdaq for several years. AWS operates 27 regions, or geographic locations, composed of availability zones – clusters of data centers for storage, networking, computing and other AWS services where customers run their workloads. In addition, Nasdaq has incorporated AWS Outposts directly into its core network to deliver ultra-low-latency edge computing capabilities from its primary data center in Carteret, New Jersey, as well as its second location in Chicago, Illinois.
Smith said, “AWS Outposts and Local Zones are part of our edge cloud strategy, which we have been building for several years to move cloud resources closer to our customers and reduce latency.”
Reduced Latency
As a result, AWS customers can run their workloads closer to their own customers. For example, round trip latency between the New York metro area and the AWS region in Virginia is nearly 20 milliseconds. If Nasdaq runs a workload in the New York Private Local Zone instead, the latency from Carteret is two or three milliseconds. Having AWS Outposts in Carteret reduces that latency to less than a millisecond.
“The only thing you have to do with your application is launch it in a different location,” added Smith. “The launch, monitoring and operations stay the same.”
He explained Nasdaq is not using a standard AWS Outpost to run MRX. Nasdaq and AWS have jointly developed an Outpost that has been specifically optimized to run ultra-low-latency workloads for capital markets.
Nate Sammons, Vice President of Enterprise Cloud Architecture at Nasdaq, described how Nasdaq’s exchange technology and AWS Outposts were adapted to deliver this solution. “We employ a number of architectural tenets, including static stability and fault domain planning to ensure markets are resilient and maintain the performance and ultra-low latency required in our industry.”
Designing for static stability and disconnected operation allows the system to continue operating in the event that connectivity is lost between the AWS Outposts and Regions. Further, fault domain planning means that multiple copies of each system component are deployed such that the overall system continues to run even if numerous different types of adverse events occur.
“We took this opportunity to rethink how we build and operate critical systems at Nasdaq. Through deep collaboration with AWS, we have achieved our goal of building and operating market systems in the cloud,” added Sammons.
Design and testing included working closely with AWS service teams to ensure the system was resilient and conducting drills with AWS support for “Game Day” scenarios.
“As a highly regulated entity, we have very stringent reporting guidelines around the world, so we need to make sure that if there is an issue, Nasdaq can detect it and immediately resolve the situation,” said Sammons.
Nasdaq plans to move additional markets and integrate more AWS services in close proximity to the match. Over the next year, the company plans to launch a co-location cloud product to allow clients to run their workloads on AWS technology with ultra-low latency access to Nasdaq markets. In collaboration with AWS, Nasdaq will create the first ever Private Local Zone designed for capital markets which will reside within the footprint of the company’s Carteret, New Jersey data center.
Next year, the company will continue to work with Nasdaq-powered market infrastructure operators with their market modernizations, sharing the invaluable experience we’ve gained thus far and including our technology clients in the co-development of exciting new cloud-based products.
- Co-location in the cloud, powered by Outpost. Nasdaq will bring to market during 2023 at its U.S. data center and work with market operators to offer at its data center.
- Nasdaq will continue the build-out of its Private Local Zone at its primary data center campus in NJ; this will also serve as a blueprint for other market exchange operators globally.
While Nasdaq is modernizing and advancing its own markets, Marc Murphy noted that “it’s even more powerful and compelling when considering the global exchange operators that use Nasdaq technology today and how these advancements can power their modernizations, enhance liquidity and establish trusted financial ecosystem of the future.”
“Our collaboration with AWS will continue, and it will deepen. We are just getting started,” Sammons concluded.
