UPDATED 15:23 EDT / NOVEMBER 04 2021


Google acquires $1B stake in CME Group as companies ink 10-year cloud deal

CME Group Inc., which operates several major exchanges used to trade in financial instruments, will move its technology infrastructure to Google LLC’s cloud platform as part of a 10-year agreement that the companies announced today.

In conjunction, Google disclosed that it has bought $1 billion worth of CME Group stock. Making such a major investment in a cloud customer is a fairly unusual move for the search giant. It’s an indication that the companies attribute a great deal of significance to their newly announced  partnership.

Chicago-based CME Group has about 4,500 employees and generated nearly $5 billion in revenue last year. The company operates several exchanges that are used to trade various types of financial instruments, particularly futures, which are contracts tied to assets such as agricultural products and metals. CME Group’s exchanges reportedly process trillions of dollars in trades every day.

“CME Group has a century-long track record of helping investors access new markets and is known for innovation in financial markets,” said Google Cloud Chief Executive Officer Thomas Kurian. “Bringing together CME Group’s best-in-class financial talent with Google Cloud’s deep engineering expertise will help accelerate technological innovation in capital markets infrastructure.”

The exchange operator has set several goals for its move to Google Cloud. CME Group is seeking to scale its information technology infrastructure, automate activities that don’t relate to trading and streamline other parts of its operations. CME Group’s objectives for the deal also include “increasing access for more market participants,” onboarding new users in a more efficient manner and reducing costs.

CME Group will pursue several different technology projects with the help of Google to realize the initiative’s objectives. In the initial phase of the project, the exchange operator will migrate systems used for clearing to Google Cloud. Clearing is the process through which a newly sold financial instrument is transferred to the buyer and funds are sent to the instrument’s seller. Further down the line, CME Group will move all its exchanges to Google’s data centers.

The exchange operator plans to draw on the services in Google Cloud to enhance its technology capabilities. One of the items on the agenda is the development of risk mitigation tools and analytics services for clients. Additionally, CME Group said that it’s looking to build “user-centric platforms” as part of the effort. 

In another initiative, CME Group engineers will use Google Cloud’s analytics and  artificial intelligence services to create new resources for clients. The exchange operator said that it’s looking to supply clients with information and toolkits  they can use to develop new financial algorithms, as well as other kinds of software. CME Group said it plans to “co-innovate” with Google to support the development of new offerings. 

The companies left open the possibility that they will collaborate not only on product development but also business initiatives. CME Group and Google stated that they will “explore ways to work together on go-to-market initiatives that deliver new innovations for CME Group’s customers.”

Google didn’t disclose the value of the deal, but given the agreement’s 10-year duration and the fact that it will encompass CME Group’s core IT systems, the price tag is likely quite significant.

“To ensure a smooth transition, we will work closely with clients to implement a phased approach,” said CME Group Chief Executive Officer Terry Duffy. “This partnership will enable CME Group to bring new products and services to market faster – all in a flexible and scalable environment that will create a wide range of opportunities for the marketplace.”

Google has been adding more features for the financial sector to its public cloud over recent quarters. In May, the company introduced Datashare, a solution aimed at helping banks and other financial firms more easily access the market data they use to inform their investment decisions. Google also provides vertical-specific capabilities for organizations in other areas such as the healthcare sector.

Rivals Amazon Web Services Inc. and Microsoft Corp. also offer numerous vertical-specific offerings through their respective public clouds. Around the same time Google debuted Datashare, AWS introduced a service called Amazon FinSpace aimed at simplifying data processing tasks for financial organizations. 

Image: Google

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