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Will cloud services be traded just like stocks and bonds one day?

Brandon Butler | Oct. 10, 2013
Several companies are exploring the idea of trading cloud services on a commodities future exchange market, and the idea is gaining credence

Harris, the economist, agrees that a volatile industry makes for a good commodity exchange, but he's unsure if cloud quite fits the bill.

While prices have been falling in the cloud computing market for the past few years, they have not been going back up. It's more of a trajectory down compared to volatility. Technology advancements like Moore's Law could render old resources not as valuable as new ones too, which could be another hurdle for trading the cloud in a future's market.

And then there is the collusion part, which Harris says is perhaps the biggest hurdle. Before allowing cloud resources to be traded on the CME, regulators would likely want to see some sort of guarantees to ensure there is no way a company could manipulate the market to their advantage. The day before a block of cloud storage hits the market another competing provider could announce that it has built a new data center and added a large amount of new supply to the market.

End users could grapple with a new buying model too. "Organizations will need to reorganize their entire businesses to take advantage of cloud markets, and will need to effectively design processes, manage risk, set financial controls, and allocate budget responsibility through new policies," wrote William Fellows, an analyst with the 451 Research Group in a report last year on the idea. "Are consumers ready for such a dramatic change to their supply chains?"

Harris says those who would benefit most are likely the market-makers that buy and trade these commodities. Eventually cost savings that the market creates could trickle down to the end users, but investors will be buying and selling, looking to make a profit in between.6Fusion hopes to explore the idea with CME Group in the coming months and hopes to make its own exchange market generally available within the next half-year. That could be the first real iteration of a platform that could be much more dominant in the future.

 

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