Millennium Management enlists Google for building custom tech solutions

Multi-strategy hedge fund Millennium Management has selected Google Cloud for its portfolio managers to leverage AI tools such as Vertex AI and data analytics via BigQuery in a multi-cloud environment. 

Millennium’s 300-plus global investment teams and 1,200 technologists can use Google Cloud’s platform to build custom tech solutions and solve challenges critical to their investment workflows. 

“Millennium has been an early adopter of cloud technology, and by offering access to the Google Cloud infrastructure, we are providing portfolio managers and technologists with optionality in cloud capabilities. We will continue to explore new ways cloud can add value to our firm, including expanding our generative AI capabilities,” said Rob Newton, global head of technology infrastructure at Millennium, in a statement.

Over the past two years, the industry has seen the Big Tech cloud providers—Google, Amazon Web Services, and Microsoft—ink flashy, long-term deals with institutions such as Nasdaq, CME Group, and London Stock Exchange Group. And banks have been just as eager to make their embrace of cloud technology known, such as Royal Bank of Canada’s laying out its hybrid cloud approach, the market data cloud partnership between Goldman Sachs and JP Morgan, and Bank of New York Mellon’s deployment of new cloud tools in January, for example.

But the buy side, by its very nature, has been quieter about its use of cloud and other emerging technologies. And though cloud and AI offer the same “raw ingredients” to users—faster, better insights, scalability, and increased efficiency—the focus, for buy-side clients, is on how to differentiate themselves and the insights they glean from competitors and peers, says Rohit Bhat, Google Cloud’s director of capital markets, digital assets, and exchanges.

According to recent estimates, 328.77 million terabytes of data are created daily. About a decade ago, firms were more obsessed with getting the most data they could pull in. While still a priority, today, they’re more focused on doing something innovative (and ideally alpha-yielding) with all the information at their disposal—providing context and analytics around all that information. 

In Bhat’s view, Google Cloud has greater potential in financial services than being just a cloud infrastructure provider. In addition to those offerings, it runs powerful “data fabric” systems, which allow users to understand information “at a Google scale”.

As an example, if a large hedge fund wants to understand hundreds—or thousands—of filings at a very high velocity to make a change in portfolio shaping, that decision-making process that used to take months is now able to be condensed into near-real time, Bhat tells WatersTechnology. 

“That can change how you think about capital. That can change how you think about allocation. So that’s one area we’re going to focus on [with the buy side].”

More data, more problems

Millennium, which manages over $60 billion of assets, has always been a leader in technology and infrastructure, so it’s no surprise they’d work with a leading tech firm like Google to support some of its generative AI use cases, says Brad Bailey, research director for Burton-Taylor International Consulting. 

In addition to the proprietary technology deployed to Millenium’s investment teams, the firm began building out its cloud capabilities in 2016. It also counts AWS as a provider of cloud services and machine learning through the firm’s use of SageMaker.

“In the end, people will spend the most resources to come up with a way to find better investment ideas,” Bailey says. “If you can add a new dataset, use a dataset more effectively, or more rapidly, you can potentially get insights that allow you to generate alpha.”

As a secondary point, he adds that the demand for more information from regulators and clients is never-ending. A new rule from the Securities and Exchange Commission, finalized in October, requires investment managers that meet or exceed certain specified reporting thresholds to report their short position data and short activity data for equity securities every month. 

To handle these needs, Bailey says there’s a lot of pre- and post-trade processing and analysis that can be done more efficiently using cloud and AI.

Keeping honest

The emergence of Big Tech firms into the capital markets space has been swifter than ever over the past year. Cloud solutions made significant inroads for them over the last five years, but the advent of GenAI has won over financial firms much quicker for these tech giants. And some in the industry have raised concerns about overreliance on the already mega-powerful Big Three, or about the possibility that they’ll look to become marketplaces or take aim at parts of the trading lifecycle beyond infrastructure.

Bhat says that’s not an unreasonable point of view but stresses Google Cloud has no intentions of becoming a financial services firm—and argues that its approach to financial services solutions backs that up.

“If you take a look at the decisions we’ve made—our historical, empirical evidence over a decade-plus—and if you look at our investments—where we continue to double down—what we are trying to do is ensure that cloud is best-formulated and we are best-situated to serve financial services in two manners,” he says.

First, the large amount of investment in financially focused solutions has been necessary to meet the requirements and desires of a diverse universe of participants—from exchanges to hedge funds to asset managers to banks to brokers. The second aim is to remove friction from the system in how all these entities interact. That’s the real differential promise that cloud holds, Bhat says. 

“We take the ecosystem and support them,” he says. “I think that’s the evidence you would see over the years. What we’re really trying to do here is help foster this ecosystem, grow it, and provide choice. If we’re honest, we’re not forcing anything.”