An Overview of CQG Hosted Gateway Services

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1 An Overview of CQG Hosted Gateway Services June 2008

2 Copyright 2008 CQG Inc. All rights reserved. CQG and DOMTrader are trademarks of CQG, Inc.

3 Table of Contents What are CQG Hosted Gateway Services?... 1 CQG Data and Analytics... 3 CQG Order Entry... 5 CQG Orders and Positions Management...11 CQG Tools...13 Trading Applications...15 CAST (Customer and Account Service Tool)...19 Support...21 Infrastructure...23 FCM Implementation...25 FCM Pricing...29 The most recent version of this document is always available at:

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5 What are CQG Hosted Gateway Services? Page 1 Through CQG Hosted Gateway Services, we offer our FCM partners: both analytic and order routing functionality in one tool; two trading application options; a tool for FCMs to manage accounts and risk; ongoing, comprehensive training and support; and a fully maintained and supported infrastructure. From its inception over twenty-five years ago, CQG has been recognized as the elite provider of sophisticated market analytics and the cleanest data in the industry. Originally offering data and analytics software, CQG understood the need for a complete trading package in one tool, and so integrated secure and reliable order routing into its software. CQG was then able to provide traders with a robust combination of market data analytics and charting and fast, secure order execution while maintaining the highest level of speed and reliability. CQG s two trading application options, CQG Integrated Client and CQG Trader, are sleek, intuitive, and easy to use. The tools offered through these applications provide the trader every advantage in making decisions about trades as well as executing those trades. CAST (Customer and Account Service Tool) enables FCMs to manage accounts and provide trade routing support. Pre-trade risk management includes a full array of settings and a margining sub-system. CQG will assist you with all application and connectivity questions. CQG provides training for clearing members to manage accounts, manage risk, and investigate orders. We also provide training and support for traders using our CQG Integrated Client. The CQG Hosted Gateway Services infrastructure is maintained and supported by CQG Operations. By installing and maintaining exchange connections, CQG saves FCMs the cost of implementation and support. Because our infrastructure is resilient and dependable, your technical resources are not drained. CQG Hosted Gateway Services Overview

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7 Page 3 CQG Data and Analytics Data CQG provides complete data for futures, options, equities, fixed income, foreign exchange, indices, and cash from an ever-expanding list of over ninety exchanges. CQG receives its data directly from the exchanges and continually monitors that data. CQG's Data Factory offers decades of historical market data and intraday numbers. Traders are also able to import their own data using CQG s XData tool. Quotes CQG offers six types of quote boards and two time and sales windows to display market data. It s possible to trade directly from the Quote SpreadSheet and Enhanced Quote SpreadSheet. Charting and Studies Traders can choose from over a dozen types of charts with flexible time and price scaling and over twenty pointer tools for chart analysis. Figure 1 Chart with SnapTrader and Order Book Displayed CQG Hosted Gateway Services Overview

8 Page 4 Traders are sure to find tools that are compatible with their strategies from CQG s ninety studies and indicators. Analytics CQG s analytics are industry-leading. Scan portfolios for pre-set conditions, create spreads with QFormulas, design custom studies, and model the market with your own trade systems. CQG s own pre-trade analytics include several proprietary studies and the Order Ticker, which displays trade volume and prices for orders placements, orders price modifications, orders cancels, and trades.

9 Page 5 CQG Order Entry Enter orders with maximum efficiency using these trading applications: DOMTrader Order Ticket Heads-up SnapTrader QSS and EQSS Alerts CQG s Trading User Guide is available on our Web site at: CQG Hosted Gateway Services Overview

10 Page 6 DOMTrader Market transparency is vital for trading on the electronically-traded futures markets. CQG s DOMTrader provides that market transparency as well as the order routing functionality traders need. The DOMTrader is comprised of a depth-of-market ladder, which displays a range of bid and offer prices and the best bid and offer with size, and trading tools, including order type selectors, buy and sell buttons, quantity buttons, and cancel buttons. A TradeFlow or tick chart can be added to the DOMTrader. Traders can use the keyboard, the mouse, or a combination of both for order entry. Figure 2 DOMTrader

11 Page 7 Placing orders is easy. Simply click the buy and sell button or drag a price into the buy or sell column. If the order price is at or below the current bid, the limit order is sent to the exchange. If the price is above the current offer, the order is sent to the exchange as a buy-stop order. If an exchange does not accept stop or stop limit orders, the CQG gateway can trigger them. Traders can also be enabled for Fast Click, which allows them to place orders immediately by clicking in the buy or sell column without delays or confirmation messages. Resting orders are displayed on the DOMTrader and identified using icons specific to the order type. Canceling orders is just as easy. Drag the order off the DOMTrader or click one of the cancel buttons at the bottom of the window. Users can cancel-replace orders by dragging the order to another price. Order Ticket The Order Ticket has everything you need to know for placing and managing orders. Figure 3 Order Ticket To place an order, click the buy or sell button. The order will then be displayed on the DOMTrader and in the Orders and Positions area of the window. CQG Hosted Gateway Services Overview

12 Page 8 Click on of the order tabs to open the order management area of the Order Ticket. It s similar to the Orders and Positions window. To cancel an order, click a cancel button at the bottom of the order ticket. To cancel-replace an order, make the desired changes and then click the RPL button. Heads-up Heads-up is a fast way to place market, limit, stop, stop limit, GTC, contingent, and complex orders. The Heads-up can be opened on both the DOMTrader and the Order Ticket. When Heads-up is selected in Trading Preferences, right-clicking a price opens the Heads-up display. Users then drag the cursor to the circle that represents the order to be placed. If applicable, additional circles will appear. Releasing the mouse button submits the order. Figure 4 Heads-up

13 Page 9 QSS and EQSS If you use CQG s Advanced Trading package, you can trade futures, options, FIT, and FX contracts on the Quote SpreadSheet (QSS) and Enhanced Quote SpreadSheet (EQSS). Figure 5 is a sample EQSS. Figure 5 Trading on the EQSS You can also place market orders for synthetic spreads and QFormulas with synthetic spreads. SnapTrader SnapTrader is a convenient way to place orders on a Chart. Figure 6 Three SnapTrader Views SnapTrader opens with market orders selected and displays the current bid and ask. Clicking the buy or sell button places a market order. To place a limit order, move the mouse over the buy and sell buttons to display limit order options. CQG Hosted Gateway Services Overview

14 Page 10 Alerts Based on market events that they specify, users can set alerts to trigger placing a market order or opening an order ticket. Users can use various price, condition, study, and time criteria, such as: the market trading at a certain price; a specified time being reached; the price crossing a trend line; a study has reaching a certain value; a condition being met; and a trading system flashing a signal. Batch Orders Traders can place batch orders by uploading text files from their computers. These text files can be created using a text editor or any software that will save in plain text format. When the file is uploaded, each order is verified and entered into the CQG application as a parked order.

15 Page 11 CQG Orders and Positions Management Orders are managed through the Orders and Positions window (Figure 7). Figure 7 Order and Positions This window includes everything traders need to know about their accounts and their current status, including: account balance; open trade equity for futures; unrealized profit/loss for options; collateral on deposit; net liquidity value; cash excess; open positions; and accurate historical data including trades and positions created by previous pit orders. CQG Hosted Gateway Services Overview

16 Page 12 Traders are able to: set up accounts and keep track of all outstanding and filled orders in one window; track orders entered through the CQG order interfaces; manage multiple accounts and multiple FCMs from one window with a single login; sort order details by any field; access historical order details; and view account balance information. Additionally, FCM back office reconciliation provides daily updates to start of day account balances and positions.

17 Page 13 CQG Tools A sampling of useful CQG tools includes News, IM, and Live Chat. News Read news stories from HighTower Report, Market News, and AFX News in addition to Dow Jones news stories. CQG will also provide the Dow Jones News Wire in French, Dutch, German, Spanish, and Russian. Choose from over two dozen pre-set filters to find stories that interest you, or define your own search. Find the most recent headlines, linked stories, and Dow Jones News Flashes with little effort. The most recent headlines are always at the top of the list, linked stories are marked, and news flashes are in red. Stories are displayed in their own pane, so that you do not have to open a new window. You can print or stories with the click of a button. Figure 8 News CQG Hosted Gateway Services Overview

18 Page 14 Instant Messaging CQG s IM allows you to communicate with other CQG users without having to use a separate instant messaging application. CQG IM lets you share pictures of your screen with other users, so rather than explaining what you see to colleagues, you can send a picture. Live Chat CQG also offers Live Chat, enabling you to contact CQG's Customer Support team directly through the Integrated Client. You are also able to send a picture of your screen in your Live Chat message for quicker and easier troubleshooting.

19 Page 15 Trading Applications CQG offers two trading options: CQG Integrated Client and CQG Trader. CQG Integrated Client The CQG Integrated Client is the classic CQG application of charts, news, quote boards, studies, and order routing (Figure 9). CQG s complete set of data, analytics, order entry, and order and positions management tools is available through this application. Figure 9 CQG Integrated Client CQG Hosted Gateway Services Overview

20 Page 16 CQG Trader CQG Trader (Figure 10) is for traders who would like to use CQG s order routing functionality, but who do not need charting and technical analysis tools. Traders have access to a quote board, account and position tracking, and depth-of-market order entry via DOMTrader and Heads-up. Figure 10 CQG Trader

21 Page 17 System Requirements The CQG Integrated Client runs on 100% IBMT PC-compatible hardware that meets these minimum requirements: CPU: Pentium 1.8GHz P4. Operating system: Windows 2000, Windows XP, or Windows NT Version 4.0 with Service Pack 6 or higher. Windows 98, Windows 95, and Windows ME are not supported. RAM/hard drive: 512MB RAM and 800MB of free space. Internet access: Internet service (ISP) via high-speed connection such as cable, DSL, T1, ISDN, fixed wireless/wireless local loop (WLL). Data delivery is via TCP/IP over the internet. System Performance and Reliability Speed Orders are routed through the gateway system at speeds that are at the forefront of the industry. CQG operations technicians and developers continually search for new ways to cut out inefficiencies and improve system performance. Uptime The rigorous standards of Six Sigma process control have been applied to the CQG Hosted Gateway Services. Currently, the reliability is measured by looking at any given minute in which a trader may wish to execute an order while markets are open. If for any reason at all, including exchange outages, the order would fail to execute properly, the system is considered unavailable. Even with these incredibly high standards, the CQG Hosted Gateway is operating at nearly six sigma. System control and stability are improved through projects aimed at increasing resilience and failover capability. CQG also works with exchanges to improve their managed connections because the CQG Hosted Gateway Services, its FCM partners, and the traders all depend on them. CQG Hosted Gateway Services Overview

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23 Page 19 CAST (Customer and Account Service Tool) CQG provides FCMs with CAST, a Web-based application used to create and manage sales series, customers, traders, and accounts; manage risk parameters; and troubleshoot orders and positions. Please see the CAST User s Guide located in the FCM Handbook for more details. Sales Series, Customers, Traders, and Accounts Accounts are managed by setting up sales series, adding customers, and authorizing traders. The actual setup and organization of groups and accounts is flexible. For example, a Sales Series can serve as an actual sales series or as a grouping of customers, accounts, CAST users, or traders. Also available is a parent-child relationship for accounts, allowing sub-accounts to pull from a single account balance to satisfy margin requirements and risk analysis. Risk Management Risk management functionality in CAST is flexible and extensive, providing enforcement of a wide-ranging set of parameters for each account. Risk parameters can be set for single trades, such as size and margin limits, and for accounts, such as position and loss limits. The system offers margining sub-system. Allowances can be made for collateral, position size can be restricted by commodity or fungible commodity/contract, and much more. Troubleshooting Support desks are able to troubleshoot the status of orders, view account summaries, view open positions, and enter external orders or positions for more accurate risk margining. Users have quick and easy access to at least thirty days of trade data. Access CAST can be accessed from any computer system that has an Internet connection. FCMs are assigned a CAST username and password. Permissions can be set with fine granularity for each user, allowing for compliance with even the most extensive separation-of-duties policy. CQG Hosted Gateway Services Overview

24 Page 20 Middle Office CQG offers a middle office feed, which is a file containing current fill, fill cancel, and fill correction information. The file can be obtained from a secure FTP server hosted by CQG or can be posted to an FTP site maintained by the FCM. The transmission frequency of the middle office file can be as often as every five minutes. Back Office In order to take full advantage of the CQG Hosted Gateway Services functionality, CQG recommends that FCMs provide daily statement files to consolidate and audit account and trade information. With the back office in production, traders will have quick and easy access to current, vital information, such as: account balances; open trade equity for futures; unrealized profit/loss for options; collateral on deposit; net liquidity value; market value of options; cash excess; open positions; and accurate historical data (including trades and positions created by previous pit orders). The back office feed will also give FCMs critical functionality, including: daily automated account reconciliation, so that balances and positions do not have to be updated manually; daily auditing of trades, balances, and positions; and complete automated pre-trade risk analysis.

25 Page 21 Support FCM Support Trading Applications, CAST, and Operations CQG stands ready to assist FCM personnel with questions regarding CAST, trading applications, or operational issues. FCMs can reach the FCM Support Desk at between Sunday at 1630 CT and Friday at 1630 CT. Demonstrations, Tutorials, and Marketing CQG representatives are available to provide order routing demonstrations and tutorials as needed to FCM personnel and customers. FCM personnel should call the FCM Support Desk at Traders can call the Trade Routing Desk at or contact their account managers to make arrangements. Marketing materials are available on the CQG Web site at Trader Support General Policies The FCM should provide CQG Trader support and demos. CQG will provide supplemental assistance if needed. It is best if customers call their FCMs for all trade related issues. FCMs must be involved with trade mitigation. In the event that a CQG Support Rep receives a customer call regarding a trade issue, the Rep will call the FCM and ask the FCM to work with its customer. CQG will provide investigative support for all trade issues. Crisis Management CQG support will FCMs when a crisis that may affect their customers is detected. CQG will notify the FCM immediately if trades need to be escalated. FCMs should provide CQG with the appropriate addresses and contact numbers for crisis management. Defects/Suggestions In the event that customers encounter issues affecting their trading, CQG will investigate the issue and respond to the customer or FCM when a solution is found. CQG appreciates customer input. When customers suggest additional functionality, CQG logs and considers each suggestion and notifies the customer if the suggestion is implemented. CQG Hosted Gateway Services Overview

26 Page 22 Operational Support Maintenance Windows Operational maintenance occurs from 1630 CT to 1700 CT on Monday through Thursday and from 1630 CT Friday to 1630 CT on Sunday. Most regular maintenance has little or no impact on the availability of services. In the event that a known interruption will occur, CQG notifies the FCM and affected traders in advance. Change Management New software versions and system modifications go through a comprehensive release process that involves extensive testing. Changes are controlled by CQG s Change Management group consisting of system and information owners. CQG communicates all software releases to FCMs. Support Contact Numbers CQG Education Center FCM Support Desk Sales Support Trade Routing Support (720)

27 Page 23 Infrastructure Figure 11 Infrastructure Infrastructure Management CQG maintains all of the gateway infrastructure hardware, exchange connections, and database systems. FCMs do not have to install hardware or software to use the Hosted Gateway Services, saving the costs normally associated with implementation and ongoing support. This arrangement also allows CQG to isolate and resolve operational or connectivity issues quickly. Exchange Connections CQG connects to each exchange on behalf of the FCM. Each exchange connection is identified by the associated FCM s log in and exchange member ID. Orders routed to the exchange are tagged with an account number designated by the FCM as well as the FCM s member ID. All necessary circuits and hardware are installed and managed by CQG. The FCM must sign the appropriate exchange agreements and must provide the necessary ITMs, keys, or login/password combinations. BrokerTec, CBOT, CME, CME Globex, E-CBOT, Eurex, EurexUS, Euronext, ICE, KCBOT, MGE, Montreal, NYMEX. CQG Hosted Gateway Services Overview

28 Page 24 Trading/Front End Connections Traders using the CQG Integrated Client connect to the order routing system via the main CQG application portal. Firewall port 2823 must be open. CQG Trader resides locally and requires that firewall port 2823 be open. CQG Trader can be downloaded from: ftp://ftp.cqg.com/cqg%20trader/cqg TRADERINSTALL.exe.

29 Page 25 FCM Implementation To establish themselves as CQG partners, FCMs must first complete these steps: Sign CQG s FCM partner agreement. Execute exchange agreements and provide CQG with ITMs, keys, and login information for exchanges. Provide business, support, billing, and operations contacts. Participate in training for CAST and trading applications. Set up an account and places test trades. Establish back office requirements and begin sending a daily statement file to CQG via ftp. Provide contact information for CQG s FCM partner Web page. The FCM is then ready to add traders and accounts. This process is shown in Figure 12. FCM Implementation Process FCM Agreement is Signed Execute Exchange Agreements Obtain Appropriate ITMs, Keys, and Login information from the exchanges, share with CQG Get training for support and order desks on CAST and front ends Set up first account, place test trades Add Traders and Accounts Determine appropriate contact information for FCM Partner web page CQG will provide a hosted web page with a link to download CQGTrader as well as demo account request form Exchange business, support, billing, and operations contacts. Review backoffice requirements Begin sending daily statement file to CQG ftp site Figure 12 FCM Implementation Process CQG Hosted Gateway Services Overview

30 Page 26 Exchange Agreements In order for CQG to connect to the exchanges on behalf of the FCM, certain agreements need to be executed. After an agreement or application has been submitted to the appropriate exchange, the FCM must request unique ITMs, keys, or login information that must then be shared with CQG. The particular requirements for each exchange will be reviewed at the beginning of the implementation process. Training CQG offers training sessions for FCM personnel using in-house presentations, Webex sessions, and phone conferences. Usually there are two sessions: one to cover CAST and another to cover the trading applications. Each session takes approximately 45 minutes. For convenience, these sessions can be combined or repeated for multiple groups at the FCM. These fundamental concepts are covered: CAST users: Each FCM establishes its own trader relationships and creates its own accounts. In order to manage these relationships and accounts easily, FCMs control their CAST users and permissions. At the beginning of implementation, CQG creates one super-user who has unrestricted access and control of that FCM s CAST. The training session utilizes this super-user to demonstrate how to set up other CAST users, assign permissions, and demonstrate how the environment can be controlled. If an official separation of duties policy exists, the scope and permissions for each user can easily be set in accordance with that policy. Creating traders and accounts and setting risk parameters: The CAST training session also shows how to set up Sales Series, customers, accounts, and traders. If necessary, multiple sessions can be arranged to train the appropriate account managers, brokers, risk managers, support desk, and order desk personnel. Trading applications: The functionality of our trading applications is intuitive. A training session is offered to demonstrate setting preferences, to address frequently asked questions, and to highlight some of the finer details of the applications. Training on the basic use of CQG charts, studies, and tools can also be provided. Test Trades During the CAST training session, the presenter will walk the appropriate FCM manager through setting up an account, usually the FCM s error account. At the end of the walkthrough, the user will be able to log in to the application and place test trades. As soon as the test trades are verified at the exchange, the FCM is considered to be in production on the CQG Hosted Gateway Services and can enable traders as desired.

31 Page 27 Web Pages CQG maintains a Web page of its FCM partners at Trading/FCM-Partners.aspx. Once an FCM has signed the CQG Hosted Gateway Services Agreement, the appropriate logo and contact information will be added. CQG also provides a Web page (Figure 13) that includes downloads and a demo account request. This page is accessed through a link on the FCM s Web site, and the FCM logo is included on the top of the page. Figure 13 CQG Demo Page Linked from FCM CQG Hosted Gateway Services Overview

32 Page 28 Back Office Although it is highly useful, the back office feed is not required in order for traders to trade via CQG Hosted Gateway Services. In some special cases, the back office parsing development may take some time to complete. Because of the amount of work that may be involved, it is critical to get daily files delivered to CQG at the earliest possible date.

33 Page 29 FCM Pricing Connection Charge $1,500 per month This covers the implementation and maintenance of exchange connections, infrastructure, support, etc. CQG Integrated Client No charge. Requires subscription to CQG Integrated Client service and an optional trading package. CQG Trader Transactional Charges: $25 per month + $0.15 per filled contract Fixed Charge: $395 per month per user or CQG Hosted Gateway Services Overview