CQG is expanding its Asian presence via the commodities futures markets at present, but the trading solutions and analytics provider may well support equities trading in the region's equity markets in the longer run, according to Mark Fischer, director – Asia Pacific.
“Although we have been in Asia for several years, CQG decided to place greater emphasis on Asia about a year ago as a definite area of expansion for us,” said Fischer, adding that the firm has been building up staffing levels in the region since mid-2010. “The majority of our expansion is centered on Singapore from where we also serve Hong Kong and China, the rest of the Asian markets as well as the global market.”
Headquartered in Denver, CQG has had a presence in the Asia Pacific for around eight years with the Sydney and Tokyo offices; its Singapore office opened five years ago. The company is currently working on building direct connectivity to the Hong Kong Futures Exchange and expects to go live in the second quarter of this year. Other markets to which the company is looking to extend connectivity include Thailand, Vietnam and Indonesia. The firm's expansion in the region mirrors the increased participation of non-domestic futures traders in Asia's commodities markets.
CQG recently entered into an order-routing service contract with Dot Commodity, Japan's largest online commodity futures broker. Earlier this year, CQG implemented a hosted exchange gateway at the Tokyo Commodity Exchange (TOCOM) and hosted direct market access (DMA) to the Osaka Securities Exchange. The company has offered direct access to the Tokyo Stock Exchange (TSE) since early 2010.
The agreement with Dot Commodity will allow the latter's clients to place orders directly to overseas commodity markets as well as Japanese domestic commodity markets, including TOCOM and the Tokyo Grain Exchange by DMA through the CQG Trader and CQG Integrated Client trading platforms. The CQG Trader is a market data and electronic trading application for traders who don't require technical analysis tools, while the CQG Integrated Client is an order execution platform that combines analytics and tools. Dot Commodity’s clients can also utilise the firm's suite of server-side tools, CQG Spreader and the CQG Aggregation, for execution and management of latency-critical trading strategies across key global and domestic exchanges.
CQG partners with more than 50 futures commission merchants and provides DMA to more than 40 exchanges through its worldwide network of co-located hosted exchange gateways. CQG's market data feed consolidates over a hundred sources, including exchanges worldwide for futures, options, fixed income, foreign exchange and equities as well as data on debt securities, industry reports and financial indices.
“Because we offer a hosted environment, a futures clearing merchant doesn't have to buy his own circuit and servers and co-location spaces; and he can easily use us to connect to the futures exchanges,” Fischer added.
CQG's client base includes mainly commodities traders and commodity trading desks of global investment banks, but also, to a far lesser extent, high-frequency traders. Trading of commodity futures is where high-frequency trading is manifesting itself most deeply in Asia, while building a more gradual presence in specific equities markets, such as Japan where around 35% of trading volume now emits from TSE’s co-location centre.
CQG has also been exploring how to appropriately provide trading connections to the equity market worldwide for some time. “There are as yet no plans for any specific market connectivity for trading in the equities space but it is certainly something that we are interested in and are continuing to explore,” said Fischer.
Moving into the equity space would require an expansion of capacity by CQG to handle the huge increase in market data volumes. “The market data volumes in the equities market is many times that of the commodity futures markets. So we would have to expand our global infrastructure if we went into equities. But it would simply be a matter of degree and not something that we would have to build from scratch. We believe that we can easily expand our servers and co-location facilities for use in other asset classes,” Fischer noted.
Author: Jill Wong