Leveraging The Crisis To Optimise Market Data Operations
The appetite for cloud capabilities and off-prem data centres in the financial industry is showing no signs of slowing but soaring energy costs, exacerbated by the war in Ukraine, remain an active threat to the underlying IT infrastructure. This insight builds on an earlier article to explore:
Earlier this year, we published a trending article1 about the potential effect the rising costs of energy in the UK and Europe could have on the capital markets data centre landscape. The loss of SunGard AS was an immediate casualty, which had an impact on CJC clients globally.
A recent DTCC report2 stated that 67% of 19 surveyed US firms said that they expect to be “cloud first” or have fully adopted cloud by 2024. By 2024, even right now, a large percentage of IT infrastructures reside in traditional, off-premises data centres. As discussed in May, the appetite for cloud is increasingly embraced by leading financial institutions like Goldman Sachs3 and CME Group4, exacerbated in Europe by soaring energy costs as well as the war in Ukraine. All financial services firms with Europe-based IT infrastructures are affected.
This insight builds on the earlier article to explore current industry sentiments and the options available to ensure the continuity of market data operations, covering the industry sentiment, risk mitigation, mitigation opportunities, and how CJC can help.
The UK-centric energy crisis continues to be a concern for the financial markets and industry stakeholders are monitoring the situation very closely. For some, the increased costs are not an immediate threat if they are fortunate enough to have multi-year contracts and hedged power in advance, however, will face some unexpected power-based contractual increases and be prepared for significant commercial increases in future contracts. Firms that are about to renew contracts will be less fortunate.
These energy costs are exacerbated by the war in Ukraine, the indefinite suspension of natural gas flows5 and the alleged sabotage of gas pipelines6 between Russia and Europe. The European bloc imported 40% of its natural gas from Russia in 20217, escalating the energy crisis from being cost driven to a supply-driven issue.
Despite the largest importer of Russian gas within the bloc, Germany, managing to reach 90% of its storage capacity in the lead-up to Winter8, crippling blackout fears remain, evidenced by JP Morgan’s (JPM) reported relocation plans8. The plans align with doomsday scenario plans reported by Bloomberg9, the Wall Street Bank10 and contingency plans allegedly drawn up by other European banks11 to ensure trading continuity should outages abruptly materialise.
100% server availability, on- or off-premises, without blackouts and a solid foothold on commercials have always been a priority. However, when it comes to data centre migrations, most financial services firms have limited options when considering crucial variables like established networking to global sites, and low-latency connectivity to exchanges, vendors, and clients. The well-known expense of data centre migrations (emerging technology and a temporary co-existence of new/old data centres) can also lead to new contracts with much higher energy commercials.
Forced to either swiftly migrate data centres, move to mitigate future costs or both. What choices do financial firms have?
Data centre migrations are sometimes unavoidable; however, new technological advances enable firms to potentially downsize or relocate server functionalities. By reducing server count, firms can reduce power consumption through known cloud capabilities and achieve commercial savings, while ensuring availability and maintaining a presence at strategic locations for latency and connectivity.
With multiple variables to consider (budgets, costs, purchasing and long-term server capacity, and cover for existing concerns and timescales), a data centre migration is a huge undertaking.
Tugrul Ozbay, a leading CJC Market Data Engineer, is frequently engaged in such projects and said, “We are frequently utilised to advise clients on the potential avenues at their disposal. No IT infrastructure is the same and is unique to every individual firm. Liaising with IT executives and their support teams, we review the servers directly and audit the application owners to truly understand a firm’s infrastructure before proposing the bespoke options available”. Tug continues to briefly outline how he approaches these engagements:
- Review client Infrastructure, liaise with IT support teams and interview application/business owners.
- Confirm if the infrastructure is in scope for modern software versions and techniques to optimise footprint without sacrificing resiliency, or if the functionality isn’t reliant on low latency.
- Determine capacity requirements and projections for future state infrastructure.
- Determine requirements (scope, cost, time, and resources.
- Plan the data and application migration.
- Plan new hardware requirements and commercials, including physical server and cloud platform.
- Document and present a proposal that covers recommended migration strategies. Detailing:
- Any potential reductions in server requirements.
- Leverageable modern techniques/technologies.
- Project timeline and milestones.
HOW CJC CAN HELP
CJC are a truly vendor-neutral and independent body that works at every layer of the financial markets. We do not derive revenue from data or infrastructure, enabling our experts to provide optimal and impartial solutions, consultancy, and professional services to the world’s leading financial institutions.
CJC is a multi-year multi-award-winning market data technology consultancy and leading service provider for global financial markets. From cloud solutions to data centre migrations and managed services for market data IT systems, CJC is a trusted one-stop-shop partner to hundreds of leading financial institutions. CJC provides support 24x7x365 with a zero-trust security approach and is ISO 27001 certified.
CJC’s trusted team of experienced engineers provide end-to-end Cloud Solutions, Operational Support Services (OaaS), and data migration services for hundreds of clients, 24x7x365 across 24 data centres.