Earlier this year, Deutsche Börse Group began developing a new cloud-native, purpose-built trading platform. It was built with a focus on digital assets, such as stablecoins, cryptocurrencies, and other tokenized assets. However, the new platform is instrument-agnostic and can trade in all types of assets, from equities to ETFs.

Developing a trading platform for digital assets isn’t just about embracing this increasingly popular and diverse digital investment universe. Tokens and other digital assets originate from decentralized systems, evolve quickly, trade 24/7 across the globe — and require a trading platform fit for purpose. Therefore, if the new trading platform can reliably deliver on digital assets, it can handle just about any asset you’d want to trade.

This work is one of the first major results of the strategic partnership between Deutsche Börse Group and Google Cloud announced in 2023. Today, institutional trading is largely done on-premise with leased-line connectivity or co-location. Deutsche Börse Group have designed a new cloud-native trading engine for a digital trading platform with 24/7 availability and a cloud-native internet API for access (with co-location as a future integration pattern for more demanding market participants) so it can be rolled-out  quickly to new markets and operated at low cost. 

As an international exchange organization and innovative market infrastructure provider, Deutsche Börse Group ensures capital markets are fair, transparent, reliable and stable. Their business covers the entire financial market transaction process chain, including the provisioning of indices, data, software, SaaS and analytical solutions, as well as admission, trading, and clearing. Additionally, it comprises services for funds, the settlement and custody of financial instruments, and the management of collateral and liquidity. 

As a technology company, the Group also develops state-of-the-art IT solutions and offers its IT systems all over the world. Trust, stability, reliability, resilience, consistency, and compliance are the cornerstones of Deutsche Börse Group’s business — and the key features we incorporated into the new trading engine over the ten months it took to build.

Digital markets demand new trading systems

Today, Deutsche Börse Group successfully operates high-volume/low-latency trading venues — such as Xetra, Börse Frankfurt, Eurex, and the European Energy Exchange, as well as partner exchanges — by using proven high-performance architectures. Deutsche Börse Group has reached this point by combining financial and technological expertise, and finding the right partners with the knowledge to support its vision.

But even with deep knowledge of our respective fields, the teams at Deutsche Börse Group and Google Cloud knew that building a digital asset trading platform from the ground up would be a challenge. It remains a new and fast-moving space that requires careful and thoughtful consideration to get right. 

The need for a new trading engine, and the desire to make it the cornerstone and first component of Deutsche Börse Group’s emerging Digital Asset Business Platform, stems from changing market structures. In the world of digital assets, 24/7 operations are required to reduce execution risk. Market participants also demand choice of market access, including internet connectivity to execute trades anytime, anywhere. Providing access via APIs and convenient SDKs is important for both developer productivity and consistent trade flow. Taken together, these features are essential in markets such as digital assets, where leased line connections and bespoke integrations are not the highest priority.

While traditional trading architectures are designed for industrial purposes and can support high-volume, established markets well, our new trading engine is designed for innovative and changing market structures. They prioritize low time-to-market, with participants demanding rapid deployment and seamless integration. Cloud-native platforms address this need by leveraging the flexibility of the cloud to accelerate deployment and simplify connectivity. This translates to faster deployment and ease of use, which are critical advantages in the dynamic world of digital assets.

Finally, a new trading engine would have to meet not only these new requirements, but also common needs such as resilience, fault-tolerance, and high availability.

The Google Cloud team has prioritized the adoption of cloud resource management best practices — infrastructure as code, the continuous integration of infrastructure changes, and their continuous delivery. This enabled the engineering team to quickly develop, test, and deploy an entire exchange, including infrastructure, with minimal manual intervention, allowing the team to experiment and test the performance of different configurations.

The overall scope was twofold: enable the rapid deployment of new trading venues, and enable incremental changes to existing markets on a daily and even intra-day basis. This would enable a market to operate 24/7.

The architecture of a cloud-native trading system

Recognizing that internet connectivity is the access pattern of choice in the target markets, the Google Cloud team designed a multi-market architecture that uses direct ingress to the Google Cloud’s platform, and leverages a Global External Proxy Network Load Balancer (GEPNLB) for traffic from both TCP/IP sockets and WebSocket clients. Each market environment utilizes its own set of Network Endpoint Groups (NEGs) and Google Kubernetes Engine clusters. This access pattern may change in the future — for example, if the markets become more liquid and therefore attract investors who require low-latency access via colocation and dedicated interconnects.

In this architecture, the NEGs act as backends for the global GEPNLB backend service, and traffic is routed to the NEGs for each market as appropriate. To reduce latency, the architecture uses single tenancy, different subnets per market, and placement policies to minimize distance between critical components and reduce network hops, contributing to improved performance and reduced latency for market participants.

To enhance security, the architecture incorporates Cloud Armor for DDoS protection. A Cloud Armor security policy is attached to the backend service with various rules, including those for mitigating DDoS attacks. This protects the application from malicious traffic and ensures service availability. 

The new trading engine at the heart of this architecture initially supports hit-and-take and request-for-offer market models. It uses sophisticated, highly available, high-performance, in-memory, fault-tolerant services to ensure fair and orderly trading. This requires all trade messages to be processed on a strict first-in-first-out basis to maintain order and prevent any unfair advantages. This is a particularly important feature, as it ensures all market participants have an equal opportunity to interact with the market.

A new kind of trading platform for new kinds of markets

To ensure smooth operations and optimal resource allocation, the team designed comprehensive monitoring of all technical activity using the Google Cloud operations suite. This included both functional monitoring to track trading activity, leveraging Google Cloud Trace to follow the lineage of requests coming in from the web and pinpoint bottlenecks, and technical monitoring to ensure the health and performance of the underlying infrastructure. Google Cloud Monitoring captured key performance indicators at each layer of the trading system stack, including application service metrics and resource utilization. 

These real-time insights were combined with rigorous performance testing and capacity planning to ensure low-latency handling of high trading volumes. This combination enabled proactive identification and resolution of potential issues and continuous optimization of resource utilization. 

To further streamline operations, the integration of managed services offered by Google Cloud, such as backup and archiving, is a future priority for Deutsche Börse Group as it seeks to focus on its core business while relying on Google Cloud for infrastructure management.

Market participants of all kinds are becoming more sophisticated and more demanding every day as technology continues to evolve the way they access markets, and the types of assets they can invest in. Deutsche Börse Group needs to offer services that are equally sophisticated and able to keep pace with the demands of its global customers. 

With our new partnership, we have laid the foundation for a trading platform of the future that will serve not only the increasingly popular world of digital assets, but also legacy trading of all kinds. And with the redundancy, flexibility, and security of our work, it has the potential to make trading of all kinds smoother, faster, and more secure.

If you are looking to reinvent your trading platforms, or any other aspect of your financial services business, discover what Google Cloud can do for you today.