CQG’s Moroney and Kenny talk to John Lothian News about new Broadridge partnership and new products and technology

May 5, 2023

John Lothian

John Lothian

Executive Chairman and CEO

John Lothian News spoke to CQG’s CEO, Ryan Moroney, and its SVP of Client Relations, Pat Kenny, at the FIA Boca Conference 2023 in Florida in March about their new partnership with Broadridge, their year-on-year growth, customer challenges, and new products including CQG One.

The partnership with Broadridge started at an FIA event about a year and a half ago when a mutual customer was pushing the two companies to work together, Moroney said. The idea was to bring together Broadridge’s OMS and CQG’s EMS into one integrated solution.

“When somebody goes out and buys an OMS provider like Broadridge and they have to buy something like CQG as well, we put the burden on the customer to find a way to stitch the two things together and somehow make them work. And we said, “Is there a way to take that friction out?” Moroney said.  “At first it was a technology integration conversation but then it morphed into, “How can we bring our products together and go to market together and try to offer an integrated EMS/OMS solution?”

That is much better than CQG creating its own OMS, Kenny said. “That’s not what we’re good at. We’re great at the front end, they’re great at the back end. Put them both together and we have a good product.”

The first step was getting clients to use a CQG product and route into the Broadridge OMS, Moroney said. The second part will allow them to route it back into CQG with all the appropriate routing rules. CQG announced its suite of execution technologies and algo trading capabilities a year ago, so there’s also integration there, he added. 

Compared to last year’s volumes, 2023 volumes “have been as good as we’ve ever had,” Kenny said. “Other people have been having problems and we’ve been able to pick up some business that we usually wouldn’t have looked at.”

Futures and options Industry volumes are up in general because volatility is up, Moroney added, and CQG’s market share has also grown over the last couple of years. There is a flood of retail customers coming into the industry, entering options and futures, and CQG is “really well positioned in that world.”

Challenges from customers include cybersecurity issues, Kenny said. In the wake of the cyberattack on the derivatives unit of ION, CQG has to make sure its customers feel comfortable with anything they do with CQG. He said CQG is already in the process of becoming SOC 1 and SOC 2 compliant. “It is really important that we’d already gotten that going, because that’s going to be one of the most important things this year – Are you cybersecurity locked in?”

Moroney added that with market volatility up there’s a big push from customers to make sure the risk management side of things is buttoned down. “We’re working with a couple of large institutional sell side firms,” he said. “That’s an area where we’ve seen some demand.”

Another area where they are seeing a lot of demand is in the options space, probably as a result of the volatility and increased risk in the current markets. CQG is working with a number of clients to build out functionality in the options space, Moroney said.

The company is also integrating some of the big changes in the crypto world into the CQG platform. “These are going to be the tier one exchanges, and this is really a service mostly for proprietary trading firms that either want to trade crypto or they’re already doing it on all the individual platforms and they want to use…sophisticated tools to do that,” Moroney said. He added that CQG has done a couple of partnerships with crypto firms themselves that allow the firms to use the futures and options space for their swap trading customers.

They have also launched a second company which is a crypto options exchange, partially owned by CQG but a separate entity altogether. They spent the past year building that out. It’s a way to interact with the crypto market but not within CQG; it’s a regulated legal entity, a decentralized options exchange that will launch later this year, Moroney said.

They also spent the past two years building and launching their newest product, CQG One. Moroney said the product is live and is seeing “healthy month over month growth.” They started with just CME as the test case for CQG One, but the product was expanded so it now covers all the CQG exchanges. It makes it easier for the coders to add widgets, and they are adding more functionality to it as they go along, Kenny said. 

They estimate that CQG’s flagship execution algorithm, called Arrival Price, saves people about a tick to a tick and a half average cost 70% of the time. “It’s the first product we’ve launched where we do charge for it but we can actually point to it and say if you use this, here is the actual bottom line benefit you will get,” Moroney said.

They also wrote a piece of functionality that aids post trade risk management, on CQG One, Moroney said, “looking at accounts and balances and margins and giving alerts and predetermining some rules – if this happens, then do this, then liquidate this order…all that is built into the platform, so it’s also a tool for the FCMs, not just the end users.” 

These are the questions we asked them:

  1. What is your new partnership with Broadridge?
  2. Are there other opportunities to collaborate with Broadridge?
  3. How does this year compare to last year for CQG?
  4. What are some of the challenges your customers are asking you to address?
  5. What is CQG doing in the crypto space?
  6. What is the status of your suite of execution technology and CQG One?

 

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