Utilizing cloud computing architectures for improved control over risk and FX back-office operations
not all cloud models are suitable in that environment,” says Cresswell. “In terms of helping banks control risk, we tend to leave that to the software companies. But we can help them control compliance, audit and operational controls at an infrastructure level.”
Te critical importance of proprietary information to buy and sell side firms makes it unfeasible for them to risk outages or data breaches on an external cloud. Public clouds do not typically have strong enough Service Level Agreements (SLAs) for them to hold outsourced business critical FX data. Furthermore, stringent regulatory rules and protocols governing the movement of financial data to different jurisdictions also represent significant barriers to the outsourcing of risk data be FX market participants taking an increasingly global approach in their trading strategies.
Javier Paz, a senior analyst at Aite Group in Boston, points out that oversight rules governing the movement of data in the US are “pretty intense” relating to issues of privacy. “Brokers and banks need to be fully able to say that by moving the processes – in terms of databases and something that contains client information – will not be compromised by the cloud hosting firm on anybody with potentially, with potential hacking to a public cloud or a hybrid cloud where the data is residing,” says Paz.
Paz sees a steady uptake of cloud services among FX market participants, but concerns over data security and the cost of verifying security are ‘slowing somewhat’ the pace of this transition. He believes that within the next five years cost savings pressures and greater familiarity with cloud technology will prevail over these concerns. He highlights back office messaging services as one of the functionalities that has first moved to the cloud. Paz looks at the cloud as part of a larger process towards specialization and “brand building”. “You have more of a specialist approach being supported by a more generalist, all-inclusive mega-cloud service provider who can bring under one roof more of the multiple communities that a firm would require,” he says.
“I frankly see risk management is going to be one of the last elements to move because of those reasons [of data security].If there is one area where you want to have control and not have surprises it is risk management,” says Paz.
Compelling solution
Nevertheless, the use of the cloud among FX market participants appears set to inexorably rise. Te cost- savings, efficiencies and brute computational force of power that the cloud brings makes it almost
Javier Paz
“Te cloud offers a compelling solution where you can buy-as-you-go and have it at a reasonable rate. A tiny fraction of what it would be if it was a cap-ex approach,”
inconceivable that the technology will not play a more important role. In the near-term, concerns over data security could make many buy and sell side firm choose a private or hybrid cloud model, housing non- proprietary or business critical data. But an increasing number of operations – including risk management and back office systems – should migrate to the cloud during the decade.
“Brokers and banks are in a position where IT budgets are under strain and moving IT processes to the cloud for risk management and compliance is a good idea because it lowers costs and it takes away the uncertainty of having to pay upfront for hardware. Te cloud offers a compelling solution where you can buy-as-you-go and have it at a reasonable rate. A tiny fraction of what it would be if it was a cap-ex approach,” says Paz of Aite Group.
Levy of SuperDerivatives boldly predicts that a leading major global bank will have migrated risk systems to the cloud within the next five years. “More banks and hedge funds will switch to risk management, which resides on external clouds,” says Levy. “Tis model will become a definite trend over the next few years. It reduces costs dramatically. It has flexibility as the market keeps adding structures. It is a very efficient way to move in the market and it allows people to have multi-asset risk management.”
april 2012 e-FOREX | 111
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166 |
Page 167 |
Page 168 |
Page 169 |
Page 170 |
Page 171 |
Page 172 |
Page 173 |
Page 174 |
Page 175 |
Page 176 |
Page 177 |
Page 178 |
Page 179 |
Page 180 |
Page 181 |
Page 182 |
Page 183 |
Page 184 |
Page 185 |
Page 186 |
Page 187 |
Page 188 |
Page 189 |
Page 190 |
Page 191 |
Page 192 |
Page 193 |
Page 194 |
Page 195 |
Page 196