Wednesday, June 14, 2023

Baker on Trading in the Clouds

This week, Nasdaq, “the second-largest stock exchange in the US,” announced its biggest deal yet: the $10.5 billion acquisition of Adenza, a software company focused on financial risk.  As I note in Derivatives and ESG, trading exchanges’ traditional business models have undergone a metamorphosis.  The largest global exchanges are increasingly becoming financial data and technology juggernauts.  Indeed, Nasdaq’s press release about the deal states: “Nasdaq Accelerates Its Transformation as a Leading Technology Provider to the Global Financial System with the Acquisition of Adenza from Thoma Bravo.” 

As I write about in Trading in the Clouds, a short piece for our 2022 BLPB Symposium Connecting the Threads VI hosted by the University of Tennessee College of Law, the continuing transformation of exchanges’ business models has also recently included significant partnerships between some of the world's largest trading exchange groups and the biggest cloud service providers, including Microsoft's partnership with the London Stock Exchange Group, Nasdaq's partnership with Amazon Webservices, and the Chicago Mercantile Exchange's partnership with Google Cloud.     

Here's the abstract for Trading in the Clouds:     

"Today, countless organizations rely upon cloud computing for operational and strategic reasons. Trading exchanges are no different. This article explores trading exchanges’ increasing migration to the cloud, related regulatory frameworks, and potential costs and benefits accompanying this transition. It concludes by positing that this migratory trend is likely to culminate in the rise of a new type of financial intermediary platform and highlights that issues in this area are ripe for additional research."

Also, check out the commentaries to this article: Professor Gary Pulsinelli's Commentary on Trading in the Clouds and Virginia Saylor's Student Commentary on Trading in the Clouds

https://lawprofessors.typepad.com/business_law/2023/06/baker-on-trading-in-the-clouds.html

Colleen Baker, Financial Markets | Permalink

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