Google invests $1 billion in CME Group in a deal to move CME’s futures exchange trading systems to the cloud and transform the global derivatives market

Alphabet’s Google announced Thursday it has signed a partnership agreement with CME Group to accelerate CME Group’s move to the cloud and transform how global derivatives markets operate with technology. As part of the deal, Google invested $1 billion in CME Group to move the futures exchange operator’s trading systems to the cloud, the two companies said.

Under the terms of the 10-year partnership, the Chicago-based exchange operator will migrate its technology infrastructure to Google Cloud beginning next year with data and clearing services, and eventually move all of its markets to the cloud.

In a statement, Chairman and Chief Executive Officer of CME Group Terry Duffy said, “Through this long-term partnership with Google Cloud, CME Group will transform derivatives markets through technology, expanding access and creating efficiencies for all market participants.”

Duffy added, “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.” To help facilitate the cloud migration for CME Group, Duffy has appointed Ken Vroman to a new role as Chief Transformation Officer.

The deal with Google is similar to a deal Amazon signed last year with two stock exchanges – Singapore Exchange SGX and London-based Aquis Exchange as part of a pilot effort to help move the stock exchanges into the cloud. The two exchanges said they undertook a proof of concept to move share trading from costly physical servers to cloud computing and also to demonstrate that trading shares in the cloud can be sufficiently fast and reliable.

The latest partnership with CME marks a big win for the tech giant. Google’s cloud business currently competes against Amazon and Microsoft Corp for large, lucrative contracts from blue-chip Fortune 500 companies. The deal will also give Google a foothold in the financial services sector, which is starting to invest big money in cloud computing services.

Founded in 1848, CME Group operates large futures exchanges in Chicago and New York City. As the world’s leading and most diverse derivatives marketplace, CME Group also enables clients to trade futures, options, cash, and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes,  foreign exchange, energy, agricultural products, and metals.