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Trading Technology

June 17, 2014

4 min read

Era of Convergence

It probably won’t surprise many to hear that we are living and benefiting from an era of convergence --from network access to data, to digitization, to cloud computing. Convergence has become the new black. With a desire for increased transparency and risk management, we are experiencing the convergence of OTC with common clearing and Trade (Swap Data) Repositories along with Swap Execution Facilities and the increased trading of standardized products. Convergence is the name in cloud computing where advancements in compute, storage, and network are converging to enable new capabilities, decrease cost, and introduce scale previously thought unimaginable. Mobility is furthering that convergence with access from anywhere enabled itself from a convergence of voice, network, compute, and software. Just as cloud and mobile computing are enabling new business models and driving innovation, convergence in the financial industry is creating similar opportunities and new drivers for technology innovation. This is enabling...

Tech Talk: CQG Discusses Mobile Trading Technology

The Rise of Mobile It’s no surprise that mobile device use has taken off in the era of bigger, better, faster. Once a luxury, mobile devices have proven to be a game changer for millions who rely on them to improve their lives both personally and professionally. Mobile web adoption is growing eight times faster now than it did in the 1990s and early 2000s; and surprisingly, 80% of time spent on mobile devices is inside apps (not talking or texting), according to DigitalBuzz. A third of internet users go online using mostly their phones, not desktop or laptop computers, according to Pew Research Internet Project. What’s impressive is that mobile tools are no longer a carbon copy of the desktop platform. The applications have gotten so advanced that users are accessing mobile even when not in “mobile” situations. We’re seeing mobile used in two very different ways: first, in...

Managing Risk in a Complex Agriculture Supply Chain

The disruptions and extreme complexities of the commodity supply chain create great risk that needs to be managed, as well as equally great opportunities if prices move in a favorable direction. The interior (North America) agricultural commodity supply chain is heavily based on various events, such as weather impacting supply and transportation, scheduled/unscheduled maintenance of railroad tracks, and planned and required federal transportation restrictions. Global demand for agricultural commodities, the impact of regional weather, and economic and geopolitical events can also dictate interior transportation requirements. As with other commodities, transportation and storage costs can have an adverse impact on agricultural commodity prices. By responding quickly and efficiently to observed and expected changes in the supply chain, commodity market participants can optimize their business operations, reduce risk, and increase profit potential. Traditional, disparate software systems are becoming insufficient in this complex business environment as they are not built to be responsive...

CTAs: Trend Following is What They Do

There was an odd story in the Financial Times titled, “Quant hedge funds hit by US bonds sell-off.” It was odd in that it treated a rather obvious observation as something more ominous and didn’t seem to have an understanding of the industry they were writing about. It further identified the “quant hedge funds” as “so called CTAs.” Someone needs to inform the FT and the author Sam Jones that CTA is a term of art, a regulatory designation meaning Commodity Trading Advisor (CTA). These CTAs trade futures contracts through various strategies on behalf of customers to hopefully earn positive returns similar to equity based mutual funds. Unlike mutual funds, however, CTA programs are absolute return vehicles that do not rely on positive equity performance. CTAs can go long or short a variety of futures markets across numerous sectors including fixed income, currencies, equity indexes, energies, livestock, grains, metals and...

Electronic Execution Risks

When you opened your futures trading account, when you took delivery of your electronic execution software, signed up for internet service, did you read all the contracts you signed? Successful trading is about the creation of profitable strategies that minimize the risk of loss. Very few of us read the contracts to which we agree. Computers and click through contracts have become so integrated into our lives, and they work so well, we do not read them. We forget about the risk of failure or malfunction associated with computers. Under the open outcry method of order execution we used a telephone to call orders into the market. Responsibilities and risk of loss were easily and clearly defined. Although not easily assigned. As volumes and volatility increase, the risk of loss increased. Firms established methods to fix the risk, recording devices were installed on all order phone lines, some firms had...

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