Nasdaq Embraces Cloud Migration and AI for Options Markets

Jun 7, 2024

John Lothian

John Lothian

Executive Chairman and CEO

June 7, 2024

ASHEVILLE, NC (JLN) – Sean Feeney, a Nasdaq executive, explained the exchange’s plans to migrate its options markets to the cloud and leverage artificial intelligence (AI) during an interview at the Options Industry Conference in Asheville, N.C. sponsored by the OCC.

Feeney stated that Nasdaq has committed to transitioning its markets globally to the cloud, partnering with AWS to ensure their technology keeps pace with rapid advancements. “Our partnership with AWS is really to shore up and ensure that our markets are moving at the speed of technology, which at this point is like the breakneck speed of life,” he said.

Regarding shorter-dated options, Feeney highlighted Nasdaq’s leadership in introducing non-Friday expiries for most ETFs with such offerings. Recently, the exchange added Monday-Thursday options for IWM (Russell 2000 ETF) and at the conference Feeney announced plans to file for Monday options on five commodity ETFs, including GLD and USO.

“The demand for these shorter-dated instruments and same-day expiring options continues to grow,” Feeney said, citing use cases like ETFs with embedded options and yield enhancement strategies.

On market modernization, Feeney revealed that Nasdaq has already begun migrating its options markets to the cloud, starting with the MRX Options Exchange in 2021. They are harmonizing their technology stack across exchanges, with plans to launch the ISE market on the unified platform this year, initially on-premises and then in the cloud to give market participants a measured and better experience, Feeney said.

The Nasdaq GEMX exchange’s cloud migration last year resulted in a 10% latency improvement and enhanced determinism, ensuring a consistent experience for participants during high data ingestion periods, he said.

Feeney also highlighted Nasdaq’s focus on the Nasdaq 100 index, calling it “the modern-day industrials,” representing innovative companies, such as the “Magnificent Seven,” which are driving the U.S. economy. Nasdaq is investing in this proprietary product and using new technologies to establish the exchange as a brand for innovation.

Regarding AI, Feeney revealed that Nasdaq has been an early adopter, using it for more than a decade in processes like determining weekly options listings and appropriate strike prices for the Nasdaq 100 index. “Embracing this technology is key, and understanding how artificial intelligence can help in the facilitation of the transfer of risk, which is our core job as Nasdaq,” he said.

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