Increasing operational agility and reducing costs
Beeks Chief Sales Officer, Alan Samuel joined IPC and leading connectivity providers in the March 2021 edition of e-Forex magazine to discuss FX’s high pace move to the cloud, the variety of cloud offerings and the demands they need to cater for.
The article looked at the acceleration of cloud services, citing research commissioned by Integral who surveyed 94 heads of FX trading as well as senior FX managers in banks and buy-side institutions around the globe. It found 69% expect their FX trading flows either to be entirely in the cloud or use a hybrid of cloud and on premise solutions within five years.
Speaking to e-Forex, Integral’s Chief Revenue Officer, Vikas Srivastava commented, “Respondents signalled the expected shift to cloud is driven by lower cost of technology, ease of integration, ability to customize, and accessibility for distributed workforces.”
“How individual market players can benefit from the cloud depends on what their approach to the market is,” surmised e-Forex,
Alan addressed this as well as some of the key deliberations for the financial services industry when considering whether to use cloud, hybrid of cloud and on premise solutions.
“What we do see is a significant increase in demand for services to be provided in a SaaS based model, so that customers can consume these services on a pay-as-you-go basis. The Beeks business model has always been an OPEX based one, which significantly reduces barriers to entry and provides the agility and scalability customers now expect to see as standard.”
“In FX trading, latency requirements make the transactional side of the business a challenge for both liquidity providers and consumers of those prices. Our customers still expect the servers we provide to either be co-located in the exchange or in a connectivity rich data centre such as LD4/NY4/TY3, which has private and secure connections to multiple ECN’s, liquidity providers and market data suppliers.”
Public, Private or Hybrid cloud?
“This is really driven by the type of market participant and the level of performance and security that is required. For a retail trader, reducing the cost barriers to entry will be more important, which will in all likelihood mean that their trading application will reside on a VPS and shared infrastructure. Institutional trading organisations with a larger budget and multiple counterparties will demand dedicated infrastructure with enhanced security and performance.
Virtually every environment we deploy now has a hybrid, multi-cloud connectivity component. There is now a realisation that there is no “one-cloud-fits-all” approach. As things currently stand, AWS, Azure and Google won’t be providing low-latency trading environments.
There is so much proprietary technology (feed handlers, multi cast data feeds, microsecond latency monitoring, etc.) built in to financial data centres that is completely bespoke. You cannot put your hardware into a public cloud environment. Resiliency in an exchange or an ECN cannot be easily moved to another availability zone. It’s not just the physical matching engine of that exchange or ECN but the ecosystem that sits around the proprietary hardware.
What firms do need is the ability to exchange data between that trading environment and the public cloud, to archive data, to communicate with other applications that are not latency-sensitive. That is why the secure, private connectivity between clouds is becoming more and more important.”
Managed Service Providers in the Cloud
“At Beeks we are seeing a growth in customers wanting a managed cloud connectivity service within our key LD4 & NY4 locations, alongside the demand for SaaS based services to complement our existing infrastructure capabilities.
We recently acquired a company called Velocimetrics, which is a trading analytics firm that provides full trade lifecycle monitoring. Historically the service was offered as an appliance that resided in a customer data centre or a customer environment. We have now launched Beeks Analytics as a Service in LD4 & NY4 data centres.
We have combined this software platform and our infrastructure platform to provide sell side institutions with a SaaS based model – including web console – all for a monthly fee, with no infrastructure deployment.
This type of service is hugely business-beneficial to banks and brokers but it has always been expensive and difficult to deploy. A lot of banks themselves would like to offer that out to their customers, but the deployment model has not previously allowed that. By offering it as a SaaS platform within the data centre environment, our early adopter customers are already thinking about how, as well as consuming it themselves, they can now package it up as a service to their end customers.
We are able to connect directly to any third party in the LD4/NY4 ecosystem. This means that the product has changed from a complex environment that firms had to manage themselves, to being able to cross-connect into Beeks as the service provider. We consume the data, analyse it and offer it to them and their customers on a monthly, fee-based system.
That is a very powerful message. To be able to deliver on the benefits of a SaaS enabled product, with private and secure connectivity, to a financial ecosystem brings immediate business value, with cost reduction to banks, brokers and their customers.”
Cloud Service Benefits
“The biggest benefits the cloud service model brings is how flexible, scalable and agile it allows our customers to be. When you combine that with the specialist knowledge within capital markets that Beeks has gained over the last 10 years, it is an incredibly powerful combination. We understand that not all customers have vast internal IT departments and by outsourcing some of that function to us, we combine the flexibility our customers require, but with the security and performance, they need.
In the last 12 months, due to COVID, financial services firms have been restricted in their ability to send out physical engineers on site. Just as you might manage this from an AWS console, the Beeks private portal allows our customers to scale up or down their infrastructure to have a fully on-demand solution. This can be either in existing locations or in brand new geographies, all without the capital investment usually required to purchase new data centre space as well as the necessary hardware.”
COVID-19 crisis acceleration
“We do think that COVID will help accelerate the process and we have seen an increase in compute requirements and demand for increased bandwidth on our WAN.
The ability to provide elastic compute to allow our customers to cope with any sudden spike in activity or trading volumes is something that we have always provided.
Cloud services allow institutions to instantly cater for spikes in demand. Covid caused a very unusual spike in demand that static data centre footprints are not designed to support.”
The future of managed cloud
“Beeks provide a back-up service which is available to all our customers in a secondary location, as well as flexible compute for storage solutions. The Beeks hybrid cloud also enables our customers to seamlessly connect to the major CSP’s if they want to utilise shared infrastructure for non-critical workloads with lower security demands. This hybrid approach means that customers can then record or analyse their latencies and time synchronisation with us rather than the public cloud.
We also see the trend from customers to use cloud to support data lake environments for market data and technical data storage. Using Beeks to provide big storage in specialist financial services data centres means that the ingress/egress costs of moving data in and out of public cloud disappear. When you are talking about terabytes of data that can become incredibly expensive.”
Trading Technology Evolution
“The Beeks Infrastructure as a Service allows customers to react almost immediately to new demands in any of our global locations. We can stand up new environments in hours and even during COVID, we have delivered brand new locations, with no pre-existing Beeks footprint, to full customer production within 6 weeks, and all with a month to month contractual commitment.
Cost Effectiveness of using managed service providers
“In the last decade we have seen a large shift from on premise data centres moving to third party data centres, such as LD4/NY4/TY3. The natural progression of this trend is to move one step further and outsource more of the infrastructure management piece to a managed service provider. At Beeks we deal with a lot of companies that have limited infrastructure or network knowledge who effectively use our skills as a utility. By following this approach, it allows them to concentrate their time and money on developing their core competencies.”
Security, high reliability and ultra-low latency
“Security, reliability and low latency have always been a core part of the Beeks offering for FX trading firms. Beeks achieved ISO/IEC 27001 information security certification in 2020, which demonstrates our commitment to continually improve this area.
Our commitment to security, reliability and latency has been demonstrated throughout our 10 year history of building out purpose-built private cloud environments for FX customers.
FX customers need a unique combination of high quality internet delivery for broad customer reach, combined with low latency direct access. Beeks has specialised in providing specialist solutions in these two areas so that they can combine the broad reach of internet delivery, with the guaranteed performance of specialist network switching and direct cross-connects to market participants.”
Important lessons about adopting new technologies
“Cash equities and spot FX have generally led the way in the last 20 years with regard to automation of trading strategies and adopting new technologies. The volume of quotes and orders in those asset classes meant that as trading went from telephone, to keypad, to automated algorithms they created environments where proximity trading became a fundamental part of the required infrastructure.
What is interesting is that companies without legacy infrastructure, such as cryptocurrency firms and FinTech providers that have benefited from the attractive initial costs and scalability of launching in the public cloud, also need to leverage the ecosystem developed by more traditional asset classes. What we see is that as these firms grow and want to engage with institutional customers, more and more want to do this over a private connection in a safe and secure third party data centre such as Equinix. Beeks are ideally situated to facilitate this.”
Managed cloud services value proposition
“At Beeks, we definitely find that our customers want to focus on services that aren’t available in public cloud e.g. precision timestamping, and trade and market data performance analytics. These services are expensive to deliver for a customer on their own, but are now an essential component of any finance-focused managed cloud service for FX.
Customers are demanding these as an integral part of any managed cloud service, and this is an area that Beeks is able to offer through our Beeks Analytics offering.”
Breaking down barriers about managed cloud
From a technical perspective, managed cloud services will definitely enable access to local markets previously not available on such a large scale. This can only help with price discovery, market depth and in turn speed of execution. As markets mature these become more commoditised and transaction costs reduce as transparency around risk becomes clearer and easier to manage.”
Influencing Factors for FX markets
“Speed, stability and security will be key principles. No one wants to publish or trade on stale prices or not be able to do either due to system instability or security issues. All three components to our solution are vital in allowing our customers to provide a quality of service which they can stand behind.
The size of the organisation providing mission critical infrastructure and their balance sheet strength is also important. Beeks has 10 years of real term experience delivering global cloud solutions to our global customer base. It isn’t a trend for us, it is core to our history.”
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