Nasdaq is re-evaluating a venture based on Amazon’s cloud computing services after a landmark partnership to offer back-office data storage to banks and brokers failed to gain traction with customers.
The exchange operator is now restructuring the service, known as FinQloud, following the departure of top executives and others associated with the project, people familiar with Nasdaq’s thinking said.
The options for FinQloud now include a sale, shutting it down entirely or – most likely – a renegotiation of the agreement with Amazon. That could see Nasdaq extend its current arrangement or invest further in the unit, one person close to the company said.
Nasdaq said in a statement: “We are always looking at growth opportunities with Amazon Web Services and ways to continue to leverage our cloud technology offering for the financial services industry.”
Any scaling back of the partnership would represent a blow to both companies. FinQloud enables banks and brokers to use Amazon’s servers to store the sensitive data that regulators require them to keep, at a lower cost than building and maintaining their own data storage facilities.
Amazon unveiled the Nasdaq partnership with much fanfare in September 2012 as it sought to market cloud computing services to financial services companies and other businesses.
The online retailer wants to turn its cloud computing business, Amazon Web Services, into an important revenue stream and a pillar of its service business.
At the time of the launch, Andy Jassy, the head of AWS and a close ally of Amazon founder Jeff Bezos, said it was “a possibility” that real-time stock trading could eventually take place in Amazon’s cloud.
Amazon declined to comment on FinQloud, but said AWS had other financial services clients including S&P Capital IQ, Tradeworx, a US financial technology company, Bankinter of Spain, and National Australia Bank. Clients in other industries include Netflix, News Corp, Unilever and LinkedIn.
Nasdaq is seeking to expand its services to generate revenues beyond its core business, but some former employees have questioned its ability to offer customised services.
“The brokerage services unit wants to provide services to customers but really struggles to get outside the exchange mindset”, said one former Nasdaq insider.
The setback for Nasdaq comes as it prepares for an investor day this week where Robert Greifeld, its long-time chief executive, is likely to face questions over a recent investigation launched by Eric Schneiderman, the New York attorney-general, into the relationship between high-frequency trading firms and stock exchanges.
Key executives have also left the group. Eric Noll, Nasdaq’s former executive vice-president for transaction services, quit unexpectedly last November to become the chief executive of struggling brokerage ConvergEx.
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