Financial markets were among the first to adopt new technologies, and that has certainly been true of the derivatives markets, which were early adopters of electronic trading. Going forward, new capabilities will transform the way industry participants communicate, analyze, and trade.

I sat down with Google Cloud’s Phil Moyer and former SEC Commissioner, Troy Paredes, for a fireside chat at FIA Boca 2022 to discuss the future of markets and policy, the new technologies that are already paving the way for greater speed and transparency, and how cloud can help promote greater resiliency, performance, and security to enable the long-term vision for the market. The following is a summary of our discussion.

The current state of cloud technology

When it comes to technology adoption, we’re seeing the market and participants adopt cloud technologies, and increasingly, machine learning (ML) on a wider scale. Cloud technology allows for easier, faster, and much more secure experimentation with large datasets and ML.

A recent Google sponsored study by Coalition Greenwich (September, 2021) showed that more than 93% of trading systems, exchanges, and data providers are in some way providing services on the cloud. The same study, revealed that about 72% of the financial industry across the buy side and sell side, intend to consume public cloud-data based market data within the next 12 months.

Data-driven decision-making and risk management have always been, and continue to remain, the cornerstones of the financial markets. Over time, technology innovation has facilitated access to better insights from data, and therefore, better decision-making and the ability to manage risk. That expectation is now mainstream, and will continue to grow in sophistication.

The multi-phased technology trajectory

The movement of exchanges to the cloud will occur in a “crawl-walk-run” fashion, with low-hanging fruits the first to be picked in the near term while bigger, paradigmatic changes will occur over the medium and long term. Some organizations are starting all three stages simultaneously, understanding that each will move at an independent cadence.

The “crawl” phase is one in which foundations are built, starting with organizations moving data to the cloud and experimenting with some degree of analytics. It’s one of the most important phases because it’s where the opportunity to increase transparency and risk management takes shape.

In moving to the cloud, the infrastructure – which in the past relied on a combination of people, processes, and some technology – becomes the code that runs applications. This early phase is key to empowering organizations to shift to a cloud-based, agile-first operating model that makes it easier and more seamless to launch new products in the future, including by freeing up people and resources from IT management to more mission-focused work.

Establishing the cloud operating model simplifies the “walk” and “run” phases where compliance is more automated, latency-sensitive applications are more readily available, and the next generation of exchanges, market participants, and regulators is better prepared to meet future challenges.

The “walk” phase is where much of the innovation happens. Exchanges are making significant progress in leveraging foundational data decisions in the “crawl” phase and innovations in the cloud to improve settlement, clearing, risk management, collateral management, and compliance, and launch new products.

And finally, the “run” phase is where organizations will start to move the latency-sensitive markets to the cloud, as the markets increasingly will demand low-latency and high performance along with transparency and analytics to solve historical obstacles to market access.

Opportunities for both regulators and market participants

Any time significant technological change takes place, regulators explore its implications, particularly with respect to their ability to meet their regulatory objectives.

Increasingly, we are seeing technological change driving more opportunities for regulators and market participants alike. Such changes may also allow better protection of the marketplace, with greater integrity and transparency.

Over time, regulatory regimes – rules, regulations, statutes, interpretations, and guidance – will also adjust to new technologies, both benefiting the marketplace and advancing regulatory goals.

As one example, the cloud is increasing the ability to meet compliance obligations by allowing compliance to be built into transactions. Moreover, predicated on the vision of real-time regulatory reporting, and given the pace of technological change in the marketplace over the last several years, various regulators have been using more advanced analytics. This trend will continue to help them more effectively and efficiently meet their objectives, and monitor and meet the expectations they have for the entire market.

Machine learning’s role in the financial markets

Google Cloud’s head of AI and Industry Solutions, Andrew Moore, said that ML will be doing three key things for us in the next 10 years: giving us meaning, providing concierge services, and serving as a guardian. Extracting information that is critical to investor decision-making can be extremely important. With more data than ever, ML can increase the ability to process it while also becoming more accessible in the cloud and better supporting regulatory objectives.

The technology will likely manifest in trading and anti-money laundering activities as they relate market functions, as well as managing a wide variety of risks – supporting the interests of both investors and regulators in terms of decision-making, surveillance, and protections.

Rather than taking individuals out of the equation, the digitization of markets, assets, and guard rails combined with ML will allow people to focus their expertise in different ways to achieve key objectives.

Building the market foundation for the future

The goals of operational resiliency, security, and privacy will continue to be critical for building the market foundation for both participants and regulators. While technology promises to create advantages in concrete, tangible ways, it will be important to scrutinize potential risks and concerns.

Priority one for technology providers is to build an environment of trustless security, including encryption at motion and encryption at rest, ensuring that markets are operationally resilient while instilling confidence for any exchange that runs on top of that infrastructure. Multicloud architectures and approaches are likely also to be part of the solution for operational resilience.

Throughout time, liquidity has been the outcome of improved access, transparency, and security. Technology providers are responding by sharing both the responsibility for, and fate of, the markets of the future to build an efficient, faster, and more transparent and secure financial industry.

You can learn more about our approach in our newest white paper, Building the financial markets foundation for the future.

Digital transformation and migration to the cloud are top priorities for a lot of enterprises. At Google Cloud, we’re working hard to make this journey easier. For example, we recently launched Migrate for Compute Engine and Migrate for Anthos to simplify cloud migration and modernization. These services have helped customers like Cardinal Health perform successful, large-scale migrations to GCP. 

But we understand that the migration journey can be daunting. To make things easier, we developed a whitepaper on application migration featuring investigative processes and advice to help you design an effective migration and modernization strategy. This guide outlines the four basic steps you need to follow to migrate successfully and efficiently:  

1. Build an inventory of your applications and infrastructure: Understanding how many items, such as applications and hardware appliances, exist in your current environment is an important first step.
2. Categorize your applications: Analyze the characteristics of all of your applications and evaluate them across two dimensions: migration to cloud, and modernization.
3. Decide whether or not to migrate an application to the cloud: Not all applications should move to the cloud quite yet. The whitepaper lists the questions to ask to determine whether or not to migrate a given application.
4. Pick your migration strategy: For the applications you decided to migrate, decide on your ideal strategy—pure lift and shift, containers, cloud managed services, or a combination thereof.

There’s a lot to consider when you start thinking about digital transformation, and every cloud modernization project has its nuances and unique considerations. The secret to success is understanding the advantages and disadvantages of the options at your disposal, and weighing them against what you want to transform and why. To learn how to migrate and modernize your applications with Google Cloud, download this whitepaper.

Working to put food on all of our tables, today’s farmers are facing a higher amount of instability from input supply chain issues to weather patterns. Adding to this challenge are problems farmers face when trying to correctly time grain purchases, sales and transport. Farmers have always been stewards of the land, but now the demand for sustainable products has them needing to better prove their regenerative practices.

At Bushel, we understand these problems can’t be solved overnight or by a single company. We focus on empowering agribusinesses and farmers to work even more closely together to build a more sustainable agricultural supply chain by rapidly responding to market changes. With Bushel, farmers can track market prices in real time, instantly buy and sell grain, analyze inventory and transactions, and securely share verified information with grain operators and other producers. We provide the digital tools to streamline how farmers buy and sell commodities throughout the agricultural industry’s supply chain to help address market inefficiencies that can lead to waste, and have the information and resources to help them flex and adapt as complexity increases in farming operations.

Approximately 40% to 50% of all U.S. grain transactions now pass through the Bushel platform. As we continue to grow, Bushel continues to focus on what digital tEmpowering Farmers: Bushel Drives 40-50% of US Grain Transactions, Fueling Sustainable Agricultureools can support each point in the supply chain. Many focus on the first mile at the farm or last mile at the store. But Bushel is focused on modernizing the middle where grain purchasing and processing sit. We aim to help local grain industries and stabilize regional agricultural supply chains.

Starting with a simple mobile app; now scaling into an agricultural ecosystem

Bushel began its journey in 2017 as a small-scale platform for farmers that delivered grain contracts, cash bids, and receipts. As Bushel evolved into a comprehensive agricultural ecosystem, we realized we needed knowledgeable technology partners to help us rapidly scale while saving time and administrative costs. That’s why we started partnering with the Google for Startups Cloud Program to get support from Google and work with Google Cloud Managed Services partner, DoiT International to help support our use of GKE and create a multi-regional deployment as well as migrate our CUDs to new Compute Engine families and continue to optimize our footprint. We’ll also use DoiT’s Flexsave technology to reduce the management overhead of CUDs in the future.

In just one year, we expanded to over 1,200 live grain receiving locations and quickly grew our services portfolio with electronic signature capabilities, commodity balances, and web development. Because that relationship between farmer and agribusiness is so important, we provide more than 200 grain companies with white-labled digital experiences so each farmer sees their local grain facility they do business with on both desktop and mobile. To further our extension into the digital infrastructure of agriculture, we subsequently acquired GrainBridge and FarmLogs to help farmers handle specific jobs and tasks, and provide the needed insights to improve their business operations. Over 2,000 grain receiving locations across the United States and Canada now use Bushel products. We accomplished all this on Google Cloud.

We leverage the secure-by-design infrastructure to protect millions of financial transactions and keep sensitive customer data safe. Our data is processed and stored in Google’s secure data centers, which maintain adherence to a number of compliance frameworks. We utilize Google Kubernetes Engine extensively as it reduces operational overhead and offers auto scaling up to 15,000 nodes.

Database provisioning, storage capacity management, and other time-consuming tasks are automated with our Cloud SQL usage. Query Insights for Cloud SQL streamlines database observability and seamlessly integrates with existing apps and Google Cloud services such as GKE and BigQuery.

Empowering farmers and agribusinesses in North America

The Google Cloud Account Team had been instrumental in helping Bushel build an expansive agricultural platform that powers APIs, apps, websites, and digital solutions. Google’s startup experts are incredibly responsive, with deep technical knowledge that can’t be found elsewhere. Google Cloud also has provided us credits to explore new ways of analyzing the vast amounts of data we generate, verify, and transfer with solutions such as BigQuery and Pub/Sub.

With BigQuery, we can run analytics at scale with 26%–34% lower three-year TCO than cloud data warehouse alternatives. BigQuery delivers actionable insights on a highly secure and scalable platform, includes built-in machine learning capabilities, and integrates with Pub/Sub to ingest and stream analytic events via Dataflow.

With Bushel, farmers across North America are rapidly responding to sudden market changes by tracking grain prices in real time and instantly buying and selling crops. We see a future where this business information becomes insights – where a farmer can not just know where to sell their grain, but when to sell. The burden right now to engage with carbon markets is high, full of paper-based binders and verification forms. We see a world where farming practices recorded digitally can be permissioned along the supply chain for a better picture of how our food is grown.

With the Bushel platform, millions of farmers around the world will have the digital tools to modernize local grain industries, build more sustainable agricultural supply chains, and help to address global food inequity.

If you want to learn more about how Google Cloud can help your startup, visit our page here to get more information about our program, and sign up for our communications to get a look at our community activities, digital events, special offers, and more.