CQG, a provider of trade routing, global market data, and advanced technical analysis, has established connectivity to Eris Exchange, providing a gateway for its futures commission merchants clients to access electronically traded interest rate swap futures, the companies announced during FIA Boca.
CQG’s core strengths in aggregation and spreading functions address the demands of the companies’ expanding mutual client bases.
“At CQG we're trying to extend our connectivity to other exchanges,” said Patrick Kenny, senior vice president of client relationships for CQG. “Getting into swap futures is a new opportunity. Our spreader product allows our end users to use CQG to peg using other exchanges along with the Eris Exchange. We are trying to facilitate what our clients are looking for.”
For fixed income and futures cash spread trading, CQG Spreader allows traders to work inter-market orders between Eris and BrokerTec, Nasdaq eSpeed, as well as other U.S. Treasury providers. The array of OTC, cash treasury and futures markets available to CQG users provides traders with flexibility when building trading structures and expressing views using Eris Swap Futures.
“CQG is an established, well-distributed technology solution in the futures exchange area and brings a significant track record in terms of charting and market data,” said Michael Riddle, chief operating officer at Eris Exchange. “Now they have integrated with Eris Exchange and offer the Eris Swap Futures through a variety of CQG trading and market data platforms.”
CQG’s client base is “particular attractive to us because it's primarily futures traders who are able to trade cash Treasuries or Treasury futures against Eris Swap Futures,” said Riddle. “Since Eris Swap Futures are a fixed income product, these products are made to trade against each other. Different correlations at different points on the curve make for interesting trading possibilities.”
Trading activity on Eris Exchange has accelerated significantly in recent months, with Eris posting nine consecutive quarters of open interest growth in Eris Swap Futures. On Tuesday, March 3, Eris experienced its second highest volume trading day ever with 19,156 contracts traded, and subsequently set a new open interest record of 159,415 contracts.
“At a macro level, the cost of OTC swap clearing is finally being felt and trickling down to banks and then to clients, and that's causing them to look for other, more cost efficient alternatives for getting their swap exposure,” said Riddle.
Eris has been averaging more than 9,000 contracts a day in March, which reflects a diversity of clients. “We've got asset managers, hedge funds, mortgage servicers, regional banks all trading against a variety of swap dealers, banks that publicly support Eris such as Morgan Stanley, and proprietary trading firms,” Riddle said.
The SEF marketplace is still evolving “and in many ways, Eris has achieved a level of all-market participation for trading swap risk to which SEFs aspire,” he added. “In dealer to client SEFs, order books have really not taken hold. In Eris, 99% of our trades are done in central limit order books. Dealer to dealer, dealer to client, client to client, it's a true all-to-all marketplace.”
CQG will roll-out access to Eris Exchange through all of its platforms and APIs, facilitating both outright and spread trading.
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