FinancialCloud: Open Cloud Framework of Modularized Financial Services

The idea of this thesis begins from the information asymmetry of financial market. Information asymmetry constitutes an information oligopoly. The oligopolies in financial markets have perfect information and knowledge and cause an imbalance of power in transactions. Another problem in information asymmetry is the expensive license cost of financial information services. Unlike large financial institutes, many of companies do not hold large numbers of derivative and only need a few features in pricing software rather than the whole software package. Moreover, these companies only need the market data related to the derivatives that they are interested in. In contrast to the centralized and oligopoly nature of the existing financial information services, we advocate the notion of a FinancialCloud, i.e., an open distributed framework based cloud computing. This new cloud-based architecture of modularized financial services provides three advantages. First, users can easily integrate modularized financial services, which are hosted on it, on demand to meet users’ needs. We may have different types of service providers in the ecosystem on top of the framework. For example, market data resellers may collect and sell a long-term historical market data. Statistical analyses of macroeconomic indices, interest rates, and correlation of a set of assets may also be purchased online. Some agencies might be interested in providing services based on pricing values of financial products in the future. Second, it is helpful for users to reduce both software and hardware costs since the modularized financial services are sold as purchase-as-needed components or pay-per-use access. Users pay for exactly what one uses to optimally manage their assets. Third, it suggests a privacy preserving mechanism from both technical and legal points of view to enrich the security of data processing, data transmission and data storage in cloud environment. By combining the above advantages, FinancialCloud may help users to lower the barriers to enter into financial markets. A user may acquire services through an online agent who is an expert in assessing the structural model and quality of existing products and thus assembles service modules matching users’ risk taking behavior. Financial consultants may also use services to provide their customers a timely knowledge-based support, such as investment risk analysis. Small financial institutes and companies may have a chance to trade structured products and extend their scopes of business. In this thesis, we will present a prototype system we developed so far.