CME Group's chief commercial officer Julie Winkler sees enriched execution and cost analytics as a key opportunity two years after the US group signed its historic data partnership with Google.

Solving historical problems with data analysis is a key benefit of Google products such as its BigQuery machine learning-enabled database warehouse and its Looker data visualisation tool, which the US exchange is using to enrich client data resources in areas like the vast US Treasury market, Winkler says.

“One example of that would be transaction cost analysis (TCA) across cash Treasury and Treasury futures activity,” she adds. “We built that functionality ourselves and have been adding levels of sophistication around key inputs like peer groupings. Historically, we would look at firms like hedge funds and proprietary trading firms as separate but increasingly the line between those traditional segmentations has become blurred.

“As we are able to move this data into Google Cloud Platform (GCP), we are able to apply machine learning models to it, look at the underlying behaviour and how these clients trade, and group players in a way that more accurately measures the effectiveness of their trade execution against the types of traders they actually compete with.”

CME Group has fixed income platform Brokertec as well as the market-leading US Treasury futures franchise. That puts the group in a position to use customised peer group information to help trading firms better understand their relative execution performance, Winkler says.

“We can also distribute that through customised visualisation tools (like Looker) or just provide the data in a usable format,” Winkler says. “That level of specificity and peer benchmarking in terms of TCA is just not available in those markets today. We have been working on this for years with our liquidity tool, but we can build this much faster in the cloud – the machine learning models that we have built are now able to be fully deployed against that dataset whereas before that could take months to set that up in the right environment. It is really the speed to market that is the game changer.”

On a business level, that will also provide benefits to the firm and its growing market data business. In second quarter results presented in July, CME saw market data revenues grow 8% year-on-year. That segment accounted for 12% of overall revenue, reflecting an industry-wide trend as exchanges get better at monetising their data services. The safety and security of client data is an important part of this changing environment for many market participants. The CME has been mindful of that as it develops its new tools.

“The thesis here is that if I can help a customer execute better in our marketplace, they are going to trade more, and that is going to help them meet their objectives and help us grow the platform,” Winkler says. “While things like this TCA tool are in production, we also have the business and sales teams also working on how best to deploy it. Again, the critical part is to ensure that data is permissioned properly and information is secure. A tool like BigQuery was not set up to enable row level entitlements and that is what we are asking it to do in this case.

“We had to build an enablement system on top of that and now that’s something that can be integrated into its product roadmap.”

While innovation is an overt component of its partnership with Google, the CME sees its commitment to maximising the potential of cloud-based services as a key differentiator in an increasingly crowded environment. Having been a first mover, the Chicago-based group is keen to stay at the cutting edge of developments as firms stake out their ground in the space.

“The evolution of data as both a standalone business line for exchanges and as a pathway to client acquisition for trading has become a critical part of how the industry fuels growth,” Winkler says. “There was a point where people were taking that for granted but we are now at the point where there is differentiation between firms on their strategies, adoption and growth trajectories in this space. At CME, we have a diverse set of customers that we appeal to, so the vision we have is to make sure that what we are going to offer them is better than what they have today and customised for their needs.”