The Cloudification of Capital Markets
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The document discusses the evolution and significance of market data APIs in the financial technology (fintech) landscape, highlighting their role in enabling banks to innovate and reduce costs through cloud-based solutions. It emphasizes the shift from traditional legacy systems to cloud APIs, which enhance user experience, speed up development, and provide scalable access to market data. Additionally, it outlines various challenges faced by financial institutions due to legacy infrastructures and underscores the transformational potential of adopting modern API strategies.
The Cloudification of Capital Markets
- 1. xignite@sdubois@sdubois THE CLOUDIFICATION OF CAPITAL MARKETS How Market Data APIs Allow Banks to Innovate At The Speed of Fintech
- 2. xignite@sdubois MARKET DATA IS THE LIFEBLOOD OF FINTECH xignite@sdubois
- 3. xignite@sdubois MARKET DATA INDUSTRY 175 Years Old $27.5 Billion +1.7% 5 Year CAGR xigniteSource: Burton-Taylor@sdubois
- 4. xignite@sdubois UBS TRADING FLOOR STAMFORD, CT 2007
- 5. xignite@sdubois xignite@sdubois UBS TRADING FLOOR STAMFORD, CT 2015
- 6. xignite@sdubois Source: Bloomberg xignite@sdubois
- 7. xignite@sdubois MARKET DATA INNOVATION CLOUD APIS Fintech Apps TERMINALS Front-Office FEEDS Mid-Office FILES Back Office
- 8. xignite@sdubois xignite@sdubois 1910’s-60’s TICKER TAPE 1990’s CLIENT SERVER 2000’s WEB 2010’s 1970’s MAINFRAME quotron Vehicles Terminals Displays Mobile Wearables IoT Robo-Advisors Trading 1,000s OF BROKERS 10,000s OF TRADERS 100,000s OF ANALYSTS MILLIONS OF USERS BILLIONS OF DEVICES xignite EXPLOSION OF END POINTS
- 9. xignite@sdubois 2020 CONNECTED DEVICES 21 BILLION Source: Gartner
- 10. xignite@sdubois HOW DO YOU SERVE 20B DEVICES? CLOUD APIS
- 11. xignite@sdubois WHAT’S A CLOUD API? • Simple To Use • Standard Based • Unlimited Power www.xignite.com – San Mateo, California – Copyright © 2016. All Rights Reserved
- 12. xignite@sdubois API GENERATIONS Program Library Program Program Program Server Program Cloud Pre-History External Libraries (60’s) 1st Generation APIs RPCs (70’s-80’s) Network 2rd Generation APIs Web APIs (90’s-00’s) 3h Generation APIs Cloud APIs (00’s-10’s) Local Not Sharable Complex Not Scalable Remote Sharable Complex Not Scalable Internet Shared Simpler Scalable Internet Mutualized Simple Zero-Footprint Internet Internet
- 13. xignite@sdubois APIS ARE 17 YEARS OLD HTML W3C Standard IMG Tag First pointer to resources on external servers JavaScript First smart client capabilities IFRAME Tag Complex resource embedding 1996 Flash Complex resource embedding XMLHttpRequest First Web API Implementation AJAX First smart client logic First API (Maps) JSONP Call a server without a server REST Roy Fielding publishes his dissertation on REST CORBA First standard RPC First API First API First API JSON First Spec XML W3C Standard xignite First Commercial API First API First API First API S3 EC2 HTML5 First Spec SOAP W3C Standard xignite First Cloud API First API 1990 1991 1993 1995 1996 1999 Feb-00 2000 2001 Jul-02Nov-00 Jun-05 Feb-05 Dec-05 1996 Aug-03 Jul-04 Aug-06 Sep-06Mar-06 Sep-121998 Oct-10Oct-08 Nov-13 FINTECH WAVE First API Oct-08 Jun-07 Jun-08 App Store iPhone 1 First API Oct-02 Jeff Bezos API Memo
- 14. The Enabler Roy Fielding’ 2000 dissertation is what gave birth to the world of APIs as we know it. It laid the foundation for the REST protocol which is used for the majority of APIs today. https://www.ics.uci.edu/~fielding/pubs/ dissertation/fielding_dissertation.pdf
- 15. The Catalyst Jeff Bezos’ famed internal Amazon memo from 2002 set the internal standard for API discipline. This internal discipline enabled Amazon to launch S3 in March 2006. In 2017, AWS is a $15B business growing 42% annually.
- 16. xignite@sdubois ANDY RACHLEFF CHAIRMAN & FOUNDER “WEALTHFRONT WAS ENABLED BY 3 TECHNOLOGIES: ETFs, TRADING APIs, AND MARKET DATA APIS.” xignite@sdubois
- 17. Xignite First API This snapshot was taken on 10/24/2003. It is available on http://web.archive.org. This was a real-time US equity API based on an INET (Island) feed. The API supported REST. Subscription started at $19.95/month. Until proven otherwise, this was the first pure-play commercial API ever.
- 18. Our First Fintech Clients While many fintech high-flyers became Xignite clients early on, the fintech wave only started taking off in late 2013. 9/2008 1/2008 4/2014 10/20113/2009 3/2011 4/2009 8/2011 Fintech Wave Google Trends Results for “Fintech”
- 20. xignite@sdubois POST-CRISIS REGULATION OPENED THE ROAD FOR FINTECH
- 21. xignite@sdubois 0 500 1000 1500 2000 2500 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 MARKETS AT AN ALL-TIME HIGH DOW JONES INDUSTRIAL AND S&P500 2000-2015 $5,000,000 $500,000 $50,000 $5,000 2000 2005 2009 2011 FINTECH REVOLUTION DRIVERS ECONOMICAL FACTORS SOCIAL FACTORS TECHNOLOGICAL FACTORS NEW MILLENIAL EXPERIENCE COST TO BUILD APPS DROPPED Maturing Of App Development Scaling of Public Cloud Social Customer Acquisition Dawn of APIs
- 22. xignite@sdubois FINSERV BIG SQUEEZE Fintech User Experience Pressures Business Model Pressures Cost Structure Pressures Regulator Balance Sheet Pressures Business Model Pressures Operational Cost Pressures Since 2013 Since 2008INNOVATION REGULATION FinServ INNOVATE TRANSFORM REDUCE COSTS COMPETE COMPLY
- 23. Legacy Challenge Market Data Legacy • Stifles innovation • Inhibits transformation • Drives up costs • Prevents controls • Increases risks • Slows compliance • Is hidden from sight
- 25. Industry Challenge Industry was entirely based on the concept of replication. All Financial Institutions replicate the same infrastructure ad infinitum The weight and rigidity of all this legacy prevents innovation and freezes the industry as a whole.
- 26. xignite@sdubois HISTORICAL PREMISE: REPLICATION Data Vendor Feeds Files Terminals DATA CONSUMERS DATA SOURCES
- 27. xignite@sdubois xignite@sdubois NEW PREMISE: MUTUALIZATION NEXT GENERATION APPLICATIONS DATA SOURCES OPEN CLOUD DATA APIS OPEN CLOUD ANALYTICS APIS
- 28. xignite@sdubois xignite@sdubois WHY MARKET DATA CLOUD APIS MATTER Reducing Costs • Eliminate inhouse hardware and software • Mutualize infrastructure • Remove vendor lock-in • Improve controls and reduce spend Driving Innovation • Improve user experience • Speed development • Enable focus on business value • Increase access to information www.xignite.com – San Mateo, California – Copyright © 2016. All Rights Reserved
- 29. Attitude Towards APIs Why do we need a web site? 1995 Of course we have a web site 2000 Most of our business comes from our web site. 2005 Why do we need APIs? 2015 Of course we have APIs. 2020 Most of our business comes from our APIs. 2025
- 30. Where Is The Ecosystem Growing? Source: ProgrammableWeb
- 31. API Initiatives in Financial Services Already Launched 39% Next 12 Months 39% Maybe 13% No 9% Are you Considering the Launch of an API Initiative in the Next 12 Months? 61% 59% 80% 29% 33% 12% Public APIs Partner APIs Internal APIs What Type of APIs Will you Be Launching? Source: Banking APIs – The State of the Market. Axway 2016
- 32. The Perceived Value of APIs 0% 10% 20% 30% 40% 50% 60% 70% 80% Innovative Services Understand Customers Account Access Increased Security Connect Services 3rd Party Apps What Important Issues Can APIs Help With? Extremely Important Very Important 0% 10% 20% 30% 40% 50% 60% 70% 80% Customer Experience Time to Market New Revenue Streams Compliance Better Data Control Innovative Reputation Cost Reduction Better Security What API Benefits Are Most Important to You? Extremely Important Very Important Source: Banking APIs – The State of the Market. Axway 2016
- 33. API Expansion Within Banks 69% 51% 50% 31% 24% 21% Culture/Bureaucracy Security Concerns Lack of Talent/Know-How Budget Compliance/Regulation Technology What Hinders The Emergence of an Open API Initiative Within Your Firm? 54% 49% 48% 39% 37% 13% 9% 0 Product Development Strategic Planning CTO CIO Channels Independent Others IT Who Should Lead API Strategic Efforts at Your Firm? Source: Banking APIs – The State of the Market. Axway 2016
- 34. xignite@sdubois ColocationColocation TYPICAL LANDSCAPE Lots of legacy in-house infrastructure Vendor lock-in and point to point interfaces Significant compliance risks and costs Many data silos across vendor technologies Reliability and maintenance issues Redundant or unnecessary expenses Rigid, expensive and innovation killer New app development nearly impossible Unable to disconnect legacy systems Costs continue to increase with scale EXCHANGES VENDORS Databases Handlers Databases Analytics Engines Databases Tick Databases App Servers Cache Servers Fanout Servers Messaging Servers Processing Engines Search Engines Trading & Algos Handlers Feeds FilesFeeds Proprietary Processing Engines Vendor Proprietary Servers Redundancy Compliance Silos Personnel Upgrades Lock-in Point to Point Legacy Front-Office Mobile & Web
- 35. xignite@sdubois EXAMPLE 1: REAL-TIME DATA TO MOBILE USERS ColocationColocation Handlers Parsing Engines Handlers Feeds EXCHANGES Databases Tick Databases Fanout Servers PROBLEMS Tons of infrastructure Peak activity scaling Software licensing Custom processing Complex programming 6-12 months minimum Scaling lead time Monitoring required Large capex and opex TRADITIONAL APPROACH: IN HOUSE Silos Redundancy Legacy Monitoring www.xignite.com – San Mateo, California – Copyright © 2016. All Rights Reserved
- 36. xignite@sdubois EXAMPLE: CLOUDSTREAMING API ColocationColocation Handlers Parsing Engines Handlers Feeds EXCHANGES Databases Tick Databases Fanout Servers CLOUD APIS CloudStreaming API EXCHANGES Deploy instantly High reliability Scalable to millions No capex No worries TRADITIONAL APPROACH: IN HOUSE CLOUD APPROACH Redundancy Legacy Monitoring Silos www.xignite.com – San Mateo, California – Copyright © 2016. All Rights Reserved
- 37. xignite@sdubois EXAMPLE 2: ENGAGING CUSTOMERS WITH ALERTS TRADITIONAL APPROACH: IN HOUSE ColocationColocation Databases Handlers Databases Analytics Engines App Servers Messaging Servers Processing Engines Handlers Feeds FilesFeeds Proprietary Processing Engines Vendor Proprietary Servers Redundancy Compliance Silos Personnel Upgrades Lock-in Point to Point Legacy EXCHANGES VENDORS PROBLEMS Tons of infrastructure Huge amounts of data Significant integration Custom processing Complex programming 6-12 months minimum Scaling lead time Monitoring required Large capex and opex www.xignite.com – San Mateo, California – Copyright © 2016. All Rights Reserved
- 38. xignite@sdubois EXAMPLE: CLOUDALERT API CLOUD APIS CloudAlert API Internal Systems Short time to market Scalable to millions No data management No capex No worries CLOUD APPROACHTRADITIONAL APPROACH: IN HOUSE ColocationColocation Databases Handlers Databases Analytics Engines App Servers Messaging Servers Processing Engines Handlers Feeds FilesFeeds Proprietary Processing Engines Vendor Proprietary Servers Redundancy Compliance Silos Personnel Upgrades Lock-in Point to Point Legacy EXCHANGES VENDORS www.xignite.com – San Mateo, California – Copyright © 2016. All Rights Reserved
- 39. The Future of APIs: Advanced APIs Today’s Typical API Use Get Data Use IaaS API • Replicate Cleanse Data Do Analytics • Secret Sauce Use IaaS API • Process Use IaaS API •Store Results Tomorrow’s Advanced API Use Consume Analytics Service •Use Data •Code Secret Sauce Get Results •On Demand •No Storage
- 40. The Future of APIs: Self-Discovery Today: Error-Prone Manual Process Tomorrow: Self-Discovery & Coding Source: GoodAPI.co
- 41. The Future of APIs: Conversation APIs Source: Amazon.com
- 42. About Xignite Making Market Data Easy • Cloud-based market data solutions • Targeting fintech and financial services providers • 1000+ customers in 55 countries Track Record of Innovation • 1st commercial API ever • 1st to bring market data to the public Cloud • 1st cloud-based market data distribution platform • 1st market data API to reach 1 trillion hits/year level Proven & Fast-Growing • 55 employees • Offices in San Mateo and New York City • $37M raised in 3 rounds from Altos Ventures, StarVest Partners and QUICK Corp. (NIKKEI) • Originally funded in 2006 BNY Mellon WTC Trading Floor Displays, New York City – Powered by Xignite
- 43. What We Do Vision: Empower and inspire the future of finance. Mission: We make market data easy. Period. Unified Cloud Solution Control Scale Integrate Simplify Market Data CloudLegacy Data Sources Developers & Applications
- 44. The Problem: Legacy Legacy Technologies Database Silos Rigid Infrastructures Point-to-Point Interfaces Proprietary Technologies No Innovation High Infrastructure Costs Lack of Transparency Compliance Risks Vendor Lock-in Investment Analytics Trading & Capital Markets Compliance & Risk Wealth Management Reporting & Accounting Front-Office Mid-Office Back-Office TERMINALS Front-Office FEEDS Mid-Office FILES Back Office
- 45. The Solution: Market Data Cloud Mutualized Data No Infrastructure Lower Costs Easy Innovation Rapid Time to Market Painless Deployment Control over Data Optimization of Spend Usage Transparency Investment Analytics Trading & Capital Markets Compliance & Risk Wealth Management Reporting & Accounting Front-Office Mid-Office Back-Office Cloud Data APIs Cloud Data Distribution Digital Channels Enterprise & EDM Systems Hosted DataLicensed Data Emulated APIsOpen APIs
- 46. Data Coverage Real-Time Data Fundamental Data Historical Data 1.2M Equities 250K Funds 6,500 ETFs 3.5M Fixed Income 5M Derivatives 27K Forex Master Data • Identifiers • Descriptors • Classification • Quotes • Historical Prices • Intraday Ticks2 and Bars • VWAP/TWAP • Market Movers • IPO Details • Corporate Actions • Symbol Changes • Delisted Securities • Historical Financials • Analyst Estimates • News • Institutional Holdings • Insider Data • Etc.
- 47. Global Coverage
- 48. Multiple Delivery Methods CloudAPIs • HTTP REST APIs • XML, JSON, CSV • For most apps CloudFiles • FTP/SFTP Files • XML/CSV output • For large data sets CloudStreaming • HTTP Streaming • JSON patch • Stream to device CloudWidgets • HTML5 Widgets • Web Site Insertion • For web sites CloudAlerts • Rule-based Alerts • Via API call-backs • For high volumes CloudAddin • Simple Paradigm • Easy Excel Add-in • For end users 48 Easy – Scalable – Integrated – Customizable