By
Godfrey Benjamin
April 18th, 2024
Google will also benefit from the deal as it gives the company a hedge in the financial services sector.
Google LLC has invested $1 billion in foreign exchange company CME Group (NASDAQ: CME) and entered into a cloud computing deal with the global market company. According to the companies’ announcement on the 4th of November, Google will help CME Group transfer its trading system to the cloud. Beginning from the coming year, CME will begin to move its technology infrastructure to Google Cloud.
CME Group to Move Trading System to Google Cloud
The terms of the deal between CME and Google is a 10-year partnership that officially begins next year when the exchange operates to move its technology system to Google Cloud. The partnership with CME Group is a significant move for the cloud business as it competes against its rivals Amazon.com Inc (NASDAQ: AMZN) and Microsoft Corp (NASDAQ: MSFT). These multinational companies rival for large and profitable contracts from blue-chip Fortune 500 companies. Along with Singapore Exchange SGX and Aquis Exchange, Amazon undertook a pilot program last year. The program helped them prove that moving share trading to cloud computing is better.
According to Amazon and the exchanges, physical servers are more costly. They also said that cloud computing would help save more money and reduce the possibility of outages.
Google will also benefit from the deal as it gives the company a hedge in the financial services sector. Recently, Google has been investing heavily in its cloud computing business. The $1 billion Google invested in CME was in the form of the exchange operator’s non-voting convertible preferred stock.
CME’s chairman and CEO, Terry Duffy, talked about how the company will transform derivatives markets through technology. Duffy added that the partnership with Google Cloud would help CME Group onboard all market participants. Speaking further, the executive stated:
“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.”
Also, Duffy has appointed Ken Vroman as Chief Transformation Officer as CME migrates its infrastructure to Google Cloud.
Google-CME’s 10-Year Partnership
The 10-year partnership will help CME scale its infrastructure by using Google Cloud’s fast, secure, and global network. Also, the deal will focus on creating real data and analytics capabilities. In addition, CME will be able to co-innovate new products with Google Cloud’s technology. The joint venture will further explore ways to jointly deliver new innovations for their consumers. Part of the partnership’s focus is on increasing efficiencies ad driving resiliency in the financial markets ecosystem.
Google Cloud’s CEO Thomas Kurian explained:
“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 innovation in capital markets infrastructure.”
CME stock is currently trading at $224.85, while Alphabet Inc (NASDAQ: GOOGL) stock is at $2,965.