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How traders working from home leverage cloud and data to cope with the new ‘normal’  

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How traders working from home leverage cloud and data to cope with the new ‘normal’   1

By Scott Mayster, Global Product Manager, Tick Data LLC, a subsidiary of OneMarketData LLC

In response to COVID-19, the New York Stock Exchange closed its doors to traders for the first time ever. While the exchange is now reopening the trading floor to a limited number of personnel, it is unlikely to return to the old normal anytime soon. The voluntary shut-down of the U.S. economy was one of the biggest shocks to the stock market in its long history – and while the U.S. stock market passed the floor-free trading test with very little disruption to most activity and participants, COVID-19 left its mark.

Sky-high trading volumes and unprecedented volatility caused data feed delays, latency, and outages due to insufficient drive space and processing power. At the precise time when every trade represented greater risk and opportunity, many market participants did not have the data they required to analyse the unprecedented activity and plan appropriate next steps.

The bright side is that with the technology currently available, we are better positioned today to deal with disruptions brought on by a pandemic than ever before. The vast majority of financial industry participants have access to broadband from home and can function while away from the trading floor or office.

As office buildings and exchanges remain sparsely occupied, cloud providers and collaboration platforms are flourishing. Secure messaging platforms are available to traders who once relied on simply standing up and yelling across the trading floor to other traders. Symphony, a secure online chat platform used by traders to communicate and trade, saw a 40 percent increase in daily users in Q1 of this year. Zoom, Amazon (provider of the AWS cloud platform), and Microsoft (provider of the Azure cloud platform and Teams collaboration app) have all reported massive rises in users and usage, and have been big winners through the pandemic, soaring to new all-time highs.

Mind the preparedness gap

What we are seeing now in the financial industry is a preparedness gap. Some financial institutions rejected the notions of cloud computing and telecommuting for years, and suddenly had no choice but to create work-from-home policies and adopt new business practices overnight. Meanwhile, others built out business continuity plans after 9/11 or simply recognised the potential of cloud computing early-on. For these firms, the transition to work-from-home has been much easier. They already speak “cloud” and have infrastructure in place to handle high volumes with minimal delays, and they can run it all remotely.

But is this a model that works for exchanges? With no end in sight to these big market swings, exchanges have been forced to make immediate upgrades to servers, caches, and networks, while having to put aside their doubts about the cloud and accelerate adoption programmes, regardless of where they are in the digital transformation process. How much easier, faster, and more cost-effective would these upgrades be in a cloud infrastructure?

Understanding the need to properly leverage data and the cloud

Data plays an extremely critical role for financial institutions, and it is important that firms effectively leverage it, allowing traders and quants to focus on their analysis and development of risk and trading models. Even in normal market conditions, trade and quote messaging traffic is growing at just about every trading venue worldwide. Whether running models on real-time feeds or building/optimising models using historical data, the need for additional processing power and data storage is nearly limitless.

We are very fortunate that digital solutions that allow exchanges and market participants to operate as normal during times of social distancing already exist. Cloud solutions can be fully-hosted in a public or private cloud and are more secure than ever before. Storing data in the cloud allows institutions to conduct quantitative analysis, back-testing, algo development, and transaction cost analysis (TCA) more easily and at a lower cost. Data, software, infrastructure, and, many other ‘as-a-service‘ solutions mean that modern cloud offerings can provide any necessary technology in a cost-effective subscription model.

Post-pandemic, the cloud is the only way forward

In a post-pandemic world, investment banks, asset managers, proprietary traders that were once required to work in company offices will be accommodated to operate remotely. The notion of banks and financial institutions collecting, storing, and retrieving massive amounts of data locally will evaporate, leaving behind only the cloud. We should expect to see new policies and regulations addressing the way financial institutions share and store data, and a rise in new cloud solutions tailored to meet the demands of different business segments and functions.

The cloud is set to provide banks and financial institutions with fast and flexible access to the data they need, as well as the processing power required to develop and optimise tomorrow’s trading strategies. By leveraging the cloud, data providers will help their clients remove the need for local hardware, data collection, and data maintenance in a cost-effective manner. Most financial institutions will have little choice but to adopt the cloud to reduce costs, expedite processes, ensure compliance, trade more strategically, and in general, remain competitive – and even thrive – in this new paradigm.

Trading

Energy stocks drag down FTSE 100, IG Group slides

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Energy stocks drag down FTSE 100, IG Group slides 2

By Shivani Kumaresan

(Reuters) – London’s FTSE 100 slipped on Thursday, weighed down by falls in energy stocks as oil prices slid after a surprise increase in U.S. crude inventories, while IG Group tumbled on plans to buy U.S. trading platform tastytrade for $1 billion.

The blue-chip FTSE 100 index lost 0.4%, while the domestically focussed mid-cap FTSE 250 index also slid 0.4%.

Energy majors BP and Royal Dutch Shell fell 3.2% and 2.5%, respectively, and were the biggest drags on the FTSE-100 index. [O/R]

“What is holding back the UK is a lack of tech stocks to capture the ‘rotation’ back into tech seen since Netflix results,” said Chris Beauchamp, chief market analyst at IG.

“Stock markets overall are much quieter today, looking so far in vain for a new catalyst for further upside.”

The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy and led to mass layoffs.

British Prime Minister Boris Johnson said it was too early to say when the national coronavirus lockdown in England would end, as daily deaths from COVID-19 reach new highs and hospitals become increasingly stretched.

IG Group tumbled 8.5% after announcing plans to buy tastytrade, venturing into North America after a stellar year for the new breed of retail investment brokerages.

Ibstock jumped 7.3% to the top of the FTSE 250 after the company said fourth-quarter activity benefited from better-than-expected demand for new houses and repairs.

Pets at Home Group Plc rose 2.2% after reporting an 18% jump in third-quarter revenue, boosted by higher demand for its accessories and veterinary services as more people adopted pets during lockdowns.

(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V and Mark Potter)

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Wall Street bounce, upbeat earnings lift European stocks

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Wall Street bounce, upbeat earnings lift European stocks 3

By Amal S and Sruthi Shankar

(Reuters) – European stocks rose on Wednesday after Dutch chip equipment maker ASML and Swiss luxury group Richemont gave encouraging earnings updates, while investors hoped for a large U.S. stimulus plan as Joe Biden was sworn in as president.

The pan-European STOXX 600 index closed 0.7% higher, getting an extra boost as Wall Street marked record highs.

All eyes were on Biden’s inauguration as the 46th U.S. President, with traders betting on a bigger pandemic relief plan and higher infrastructure spending under the new administration to boost the pandemic-stricken economy.

Tech stocks rallied to a two-decade peak in Europe after ASML Holding NV rose 3.0% to all-time highs on better-than-expected quarterly sales and a strong order intake for 2021.

Meanwhile, Richemont rose 2.8%, after posting a 5% increase in quarterly sales as Chinese splashed out on Cartier, its flagship jewellery brand.

Britain’s Burberry jumped 3.9% after it stuck to its full-year goals, saying higher full-price sales would boost annual margins, while Asian demand remained strong.

The pair boosted European luxury goods makers that are heavily reliant on China, with LVMH and Kering gaining between 1% and 3%.

“Any sign that retail spending is picking up in China is going to be a boost to the Western markets and those heavily exposed to it,” said Connor Campbell, financial analyst at SpreadEx.

The European Central Bank is set to meet on Thursday. While no policy changes are expected, the bank could face more questions about an increasingly challenging outlook only a month after it unleashed fresh stimulus to bolster the euro zone economy.

“With the new round of easing measures fully in place and no new forecasts to be presented tomorrow, it should be a fairly uneventful day for the euro,” ING analysts said in a note.

Italy’s FTSE MIB gained 0.9% and lenders rose 1.6% after Prime Minister Giuseppe Conte won a confidence vote in the upper house Senate and averted a government collapse.

Conte narrowly secured the vote on Tuesday, allowing him to remain in office after a junior partner quit his coalition last week in the midst of the COVID-19 pandemic.

Daimler AG jumped 4.2% after its Mercedes-Benz brand unveiled a new electric compact SUV, the EQA, as part of plans to take on rival Tesla Inc.

Germany’s Hugo Boss added 4.4% after Mike Ashley-led Frasers said it boosted its stake in the company.

(Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur and Kirsten Donovan)

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Miners lead FTSE 100 higher on earnings cheer

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Miners lead FTSE 100 higher on earnings cheer 4

By Shivani Kumaresan

(Reuters) – UK’s FTSE 100 rose on Wednesday as miners gained after a strong production forecast from BHP Group, while encouraging updates from luxury brand Burberry and education group Pearson drove optimism about the earnings season.

BHP Group Ltd climbed 2.8% after it forecast record iron ore production for fiscal 2021, helped by high prices for the commodity. Other miners Rio Tinto, Anglo American and Glencore rose more than 2%.

Global markets rallied in anticipation of more fiscal spending as Joe Biden prepared to take charge as the 46th U.S. president.

“There is a view in the markets that more spending is in the pipeline, after all, Mr Biden will want to start his presidency on a positive note,” said David Madden, market analyst at CMC Markets UK.

The FTSE 100 index rose 0.4% and the domestically focussed FTSE 250 index added 1.4%.

The FTSE 100 has recorded consistent monthly gains since November after the sealing of a Brexit trade deal and hopes of a vaccine-led economic recovery, but has recently lost steam as tighter business restrictions sparked fears of a slow rebound.

Burberry rose 3.9% as it stuck to its full-year goals and said higher full-price sales would boost annual margins and Asian demand remained strong.

Global education group Pearson jumped 8.6% after its global online sales grew 18% in 2020, helped by strong enrolments in virtual schools.

WH Smith Plc surged 10.4% to the top of the FTSE 250 index as its trading during Christmas was ahead of its expectations.

(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V, William Maclean)

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