CME Group and Alphabet Inc.’s Google has inked a strategic deal in a bid to transform the derivatives sector with the help of technology, expanding access and creating efficiencies for all market players.
According to the official press release, Google has injected $1 billion into the derivatives marketplace through an equity investment in a new series of non-voting convertible preferred stock of CME Group.
The strategic 10-year partnership will enable CME to transfer its data and clearing services to Google Cloud starting next year, followed by its trading and other markets. In short, the main objective behind the move is essentially to revolutionize the way global derivatives markets traditionally operate.
CME Group Signs 10-Year Partnership with Google Cloud. pic.twitter.com/R638yrt7fL
— CME Group (@CMEGroup) November 4, 2021
Google-CME Group’s Agreement: Details
Terry Duffy, who happens to be the Chairman and CEO of CME Group, the company plans on working closely with its clients to ensure that the transition is hassle-free and smooth. The team also plans to deploy a “phased approach.” In addition to that, the exec has reportedly appointed Ken Vroman to serve as Chief Transformation Officer to help the smooth transition to the cloud migration for CME Group.
The exec also mentioned that the latest deal will not only aid in the creation of a myriad of opportunities and but will also allow CME Group to roll out new products and offerings to market faster.
Today, we announced a 10-year strategic partnership with @CMEGroup to increase market access, create efficiencies for clients, and build new products and services for the financial services industry. Read more here ↓ https://t.co/IVW9cajSsn
— Google Cloud (@googlecloud) November 4, 2021
The focus of the partnership between Google and the CME group will be on delivering five crucial benefits to all market players. These are:
- CME Group can expand access by leveraging Google Cloud’s global network to ramp up its infrastructure and onboard new users.
- Google Cloud’s data analytics and ML solutions may help CME Group to offer clients with creating real-time data and toolkits.
- CME Group can also co-innovate new products using Google Cloud’s tech and introduce new products and services.
- The derivatives marketplace will also be able to streamline operations and increase efficiency.
- The partnership will also foster resiliency in the financial markets ecosystem.
Commenting on the decade-long agreement, Thomas Kurian, CEO, Google Cloud stated,
“CME Group has a century-long track record of helping investors access new markets and is known for innovation in financial markets. 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.”
Besides, CME isn’t the only one migrating to cloud-based software and data analytics. Other exchange businesses such as Nasdaq Inc. and Cboe Global Markets Inc. have also tapped into expansion to these avenues.