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Billionaire Ken Griffin’s Citadel Securities has moved the testing of the algorithms that power its millions of trades a day into the cloud to cope with the vast quantities of data thrown up by financial markets.
The Miami-based market maker has switched storage of trading data and running the programmes that simulate price moves out of its own servers and into Google’s cloud computing service, it told the Financial Times.
The shift makes Citadel Securities the latest financial services company to increase its reliance on Big Tech cloud services and is a win for Google as Silicon Valley companies host more business traditionally guarded closely by Wall Street.
Over the past few years, operators of some of the world’s largest exchanges have put more applications on to servers run by Big Tech companies, to more easily and quickly package and process data.
Citadel Securities is one of the world’s biggest high-speed trading firms, competing with rivals like Susquehanna, Jane Street and Virtu Financial and estimated it was involved in nearly one in every four US equities trades last year.
The US group has moved information that its quantitative researchers use for all markets, including stocks, derivatives, bonds and currencies.
“We’ve moved virtually all the data that we need for every asset that the firm is involved in . . . all the data that all the researchers need,” said Costas Bekas, head of research platform at Citadel Securities.
“The data that we work with is massive, the computations even more so. It includes data from the exchanges we work with but we also subscribe to additional, external types of data that researchers use to build these models,” Bekas said.
“It may be that for a certain time we’ll need a specific number of servers but if market conditions change, we need to scale that five or 10 times. How fast can you build a new data centre and will you need that over time — that is an impossible problem to solve.”
The move marks an expansion of Google’s entrenchment in the financial sector and the newest sign of financial firms cosying up to Big Tech, which has a string of partnerships with exchange operators including Nasdaq and London Stock Exchange Group.
Rohit Bhat, managing director of capital markets, exchanges and digital assets at Google Cloud, said that high-frequency trading firms were a segment “that we are working very closely with”.
The increasingly important position of a small number of large US tech firms has drawn the interest of regulators, who are concerned about the risks that increasing reliance on cloud computing firms might pose to the financial sector.
Google has a 10-year deal with derivatives exchange CME Group and invested $1bn in the Chicago-based business. The tech giant is also running a 10-year partnership with Deutsche Börse, while New York’s Nasdaq is working with Amazon Web Services. Microsoft took a board seat and 4 per cent stake in London Stock Exchange Group as part of a 10-year partnership.
Last year, UK financial regulators and the Bank of England warned of major risks if cloud companies were hacked or failed.
Bhat added that Google was working with regulators to understand their requirements and make sure the technologies were used securely.
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