The Chicago futures market CME Group and Google announced an agreement Thursday to move financial trading technology to cloud computing systems, a deal backed by a $1 billion investment.
The 10-year partnership, to be implemented in phases, includes Google’s commitment to buy $1 billion in nonvoting preferred stock in CME. The stock can be converted into common equity shares in CME. The current market value of CME is about $80 billion.
Executives said CME will move its data and clearing services to Google Cloud starting next year and that other market information will follow. CME and Google said the partnership will improve market access and speed the delivery of new algorithms and trading toolkits.
CME said the shift will allow it to streamline operations and automate some functions. A spokeswoman declined to discuss possible impacts on company jobs. CME is the world’s largest marketplace for futures and includes business drawn from the Chicago Mercantile Exchange and the Chicago Board of Trade.
The partnership “will transform derivatives markets through technology, expanding access and creating efficiencies for all market participants,” CME Chairman Terry Duffy said in a news release. “To ensure a smooth transition, we will work closely with clients to implement a phased approach. 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.”
Executives said the deal will deliver enhanced cybersecurity, a concern with all cloud computing but especially when financial markets are involved. Further details of the partnership will be disclosed later, they said.
Thomas Kurian, CEO of Google Cloud, said his operation’s “deep engineering expertise will help accelerate technological innovation in capital markets infrastructure.” Google is part of the holding company Alphabet.
Duffy said he has named Ken Vroman as chief transformation officer to lead the effort at CME. Vroman has been a senior managing director in charge of international growth.