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In response to regulators’ increasing demands, Nasdaq OMX Group (NASDAQ:NDAQ) announced on Tuesday that it had launched a cloud computing platform built by Amazon’s (NASDAQ:AMZN) Web Services which would provide more granular data on their clients’ trading activities.
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Historically, large banks and brokerages have used specialist in-house systems for data storage because external systems drew security concerns. But policymakers in both the United States and Europe want more detailed information on the day-to-day activities of banks and brokerages to help authorities spot illicit or risky trading patterns.
Nasdaq and Amazon Web Services partnered to develop a cheaper route to regulatory compliance. The system, FinQloud, will pass through a strict encryption system so that platform complies with the strict security requirements of the regulators. Brokers will be able to store order and transaction data and maintain records using the FinQloud system. Financial companies will only pay for the capacity they use; the exchange will be charged fees per gigabyte of information clients store.
The deal between Nasdaq and Amazon allows both companies to expand their particular business. For Amazon, the new service is a means to add financial customers to the data storage services it already offers to clients like Netflix (NASDAQ:NFLX) and the National Aeronautics Space Administration. In 2011, the online retailer generated $800 million in sales from its cloud-computing services, according to Goldman Sachs (NYSE:GS). Selling the service to banks and brokerages will help Nasdaq offset decreasing sales from trading. New-York-based Nasdaq said that in the second quarter this year, access and broker services revenue increased 12 percent from a year earlier, to $66 million.
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