Alphabet Inc's. (NASDAQ: GOOG) (NASDAQ: GOOGL) Google and financial services provider CME Group Inc. (NASDAQ: CME) are collaborating to innovate in the financial trading space by constructing a new cloud-computing network.
The project aims to transition the futures and options trading of CME into a more modern, cloud-based environment.
The partnership will focus on creating cloud and colocation facilities adjacent to CME's existing data center in Aurora, Illinois.
These facilities are expected to enhance trading speeds and efficiency for market participants.
According to Bloomberg, construction is scheduled to commence later this year with phased transitions to the cloud infrastructure.
The venture is part of a broader 10-year alliance initiated in 2021 between Google and CME, including a substantial $1 billion equity investment by Google.
The collaboration aims to migrate not only trading but also data and clearing services to the cloud, marking a milestone in the integration of cloud technology in financial markets.
The decision to establish the new facility in Aurora was strategically made to minimize disruption for clients, particularly those concerned about the speed of transactions and geographical advantages.
CME plans to give its clients an 18-month notice prior to transitioning markets to the new platform.
Additionally, firms adopting this new infrastructure will gain access to advanced Google Cloud services, including AI tools and data analytics, to enhance trading strategies and market analysis.
The move towards cloud-based platforms is seen as a strategic shift to reduce costs and increase efficiency within the financial markets.
The transition aligns with similar initiatives by other exchanges, like Nasdaq, which has also embraced cloud technology in partnership with Amazon.com Inc (NASDAQ: AMZN).
Alphabet stock has gained more than 54% in the last 12 months. Investors can gain exposure to the stock via the Communication Services Select Sector SPDR Fund (NYSE: XLC) and Vanguard Communication Services ETF (NYSE: VOX).