$1B Google Investment in CME Group: New Opportunities for Agricultural Commodities
CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. While Google Cloud accelerates organizations' ability to digitally transform their business with the best infrastructure, platform, industry solutions and expertise. The company delivers enterprise-grade solutions that leverage Google's cutting-edge technology – all on the cleanest cloud in the industry.
Recently CME Group signed a 10-year partnership with Google Cloud to transform global derivatives markets through cloud adoption.
Philip Moyer, VP of strategic industries at Google Cloud, says that this deal is a demonstration by Google and CME, a committed long-term journey necessary to take the hardest elements of the financial services industry to the cloud.
Although the companies are not saying how the deal is structured in terms of costs, it can be noted that the plan is to implement it across several phases, starting with the easiest workloads with the lowest latency requirements, followed by data analysis tooling.
This article provides the main information regarding to the CME and Google Cloud deal. Also it is elaborated on how this agreement helps agriculture by bringing new opportunities for its commodities.
CME & Google Cloud Collaboration
To deliver real-time access to market data to its customers worldwide, CME Group chose to partner with Google Cloud, which is known for its expertise in data and global network strength.
Before CME Group engaged with Google Cloud, customers could access CME Group’s data in two ways: by co-locating in its data center in Illinois or by subscribing to a market data aggregator service. Over the past decade, however, demand for data grew and CME Group heard from more and more customers who wanted access that was easier, faster, and more cost-effective, which made it essential that CME Group offer a cloud-based data service.
As a result, the company chose to partner Google Cloud to offer its customers flexible, cost-effective access to market data, helping firms mitigate risk and drive revenue.
Google Cloud delivers access to market data for about 10 percent of the cost of traditional means, it offers flexible on-demand, pay-as-you-go model for market data consumption, paving the way to reach a broader target customer audience and lastly it expands global access footprint, delivering market data through more than 20 computing locations around the world.
Partnering with Google Cloud, CME Group aimed to revolutionize the 20-year-old data connectivity and delivery model and make it easier for customers to immediately access data directly from anywhere in the world.
CME Group has built a reputation for giving investors what they need most: accurate, reliable market data. Today, its customers —including banks, hedge funds, retail investors, and cryptocurrency traders— use this information to manage their risks, inform their investment strategies, and guide business decision-making.
In addition, CME Group saw the opportunity to take advantage of the Pub / Sub real-time messaging service (which is offered by Google Cloud ad an hourly fee model for cloud-computing usage) so its customers could receive messages and data through more than 20 computing locations globally. This service reduces the complexity, expense, and operational overhead of receiving real-time market data.
CME Group leveraged Pub/Sub to create Smart Stream, a service that gives customers real-time market data in the cloud through a highly flexible, on-demand, pay-as-you-go structure.
With Smart Stream, the company continues its tradition of being an innovator in the financial services industry.
The big question aside from the overall scope of the deal is where the $1 billion investment fits in, and Moyer says it’s about showing CME that it too has skin in the game. The investment involves non-voting stock. There is no board seat and CME’s board is free to spend the money as it wishes. But Moyer says that the investment is about showing that Google is invested in the long-term success of the relationship.
Agreement Impact on Agriculture Commodities
CME group offers the widest range of agricultural commodity futures and options available on any U.S. exchange.
It is used as a main supplier of market data for agricultural commodity futures on Trading View. Even though this market segment is often perceived as a whole, each product behaves differently.
CME group helps you expand your understanding of what is happening in the futures, options and OTC markets, discover opportunities and watch for trends across all asset classes.
As mentioned before, the company engaged with Google Cloud to offer its customers flexible, cost-effective access to market data, helping firms mitigate risk and drive revenue.
Because they will be able to access data through the cloud, there’s no need for customers to set up a hub at CME Group’s data center, or to provision servers, install a network, or manage infrastructure. This reduces customers’ costs, which in turn makes the overall cost of data and licensing through CME Group lower as well. With Smart Stream, customers can access market data more cost-effectively for about 10 percent of the cost of traditional means. This can amount to a savings of thousands of dollars a month, depending on the customer location.
So this collaboration helps the industries to save time and money, effectively bringing new opportunities for agricultural commodities as well.
Conclusions
Google has invested $1 billion in futures-exchange giant CME Group Inc. and struck a deal to move the company’s core trading systems to the cloud.
The companies said that their 10-year partnership would allow CME to bring on new users faster, streamline operations and develop new tools with Google technology, such as artificial-intelligence software for monitoring market risks.
To ensure a smooth transition, they will work closely with clients to implement a phased approach. This partnership will enable CME Group to bring new products and services to market faster – all in a flexible and scalable environment that will create a wide range of opportunities for the marketplace.
Under the agreement, CME Group will migrate its technology infrastructure to Google Cloud beginning next year with data and clearing services, and eventually moving all of its markets to the cloud.