BOCA RATON, Fla. (JLN) – At the recent FIA, Inc.'s International Futures Industry Conference, CQG executives Pat Kenny and Ryan Moroney shared insights into the company’s exploration of AI technology and its future plans during an interview with John Lothian News for the JLN Industry Leader video series sponsored by Wedbush Securities.
Moroney revealed that CQG has successfully developed an AI model capable of predicting the next tick in the S&P biotech index with approximately 80% accuracy, using only publicly available market data. However, he emphasized that their goal was not to find the “Holy Grail” but rather to provide customers with tools and infrastructure to conduct their own research and develop strategies.
If we wanted to build something in the AI space, what's something that would be kind of uniquely CQG, it almost you would have to be CG to do it. Most of our business has been about helping traders make better decisions and giving them data and analytics, not telling them what to do, but giving them tools where they can decide what to do. So that was really our focus was the first application we built for ourselves and kind of our our validation was to see, can we use this toolkit to say what's going to happen next in the marketplace? Can we predict the next tick in the market? So we tested it, that tested it, trained everything. And then actually just recently we're using live data, tested everything and we actually are able to predict about 80% accuracy what the next ticket is going to be, specifically in this case the SP market. What are some of its other use cases? Somebody asked me recently, you know, OK, right, you guys could predict the next tick in the market. Have you found the Holy Grail and and? The answer to that is no, right? So our goal is not to find the Holy Grail. In a way, our goal was to see could we uncover the map for how to get there and provide a bunch of technology and tools and infrastructure and data to the customers where that they can do some of their own research, come up with their own strategies. So kind of back to like the CPG way of doing business. There are just kind of talking to some of our partners, different applications people are looking to explore and has to do with. So within the option space you kind of heard in the exchange panels. Like how important options are becoming a part of our ecosystem. You know, you can predict next tick, you predict neck ball, right? Can you like have like forward-looking volatility predictions, that kind of stuff that can make something like an options trade more profitable? So we're looking at some things there. Of course, we wouldn't be seekg if we weren't looking to seek. We predict like next bar on a chart because charting is so much fun history. So we're looking at that stuff. We're also working with some strategic partners to see what things would they want to build with us. Are you think back to style? Park profile, which is back when I was on the trading floor now, that was something that was astonishing right when it came out, we started watching it. It was such a simple thing where the distribution of markets at and if it breaks up above it, buy it. If it goes below it, sell it. Like comparing it to that. But I think it's something very similar to that. It's, you know, it's another tool. How did you conclude to explore AI this way? Everyone was trying to think is this a world we should be playing in not. Because you're trying to be opportunistic, but because we have an obligation to serve our customers and if this is something we can build for our customers, it makes them more successful, that's what we need to do. So we had to explore it, but again, exploring it in a way that we felt like had to be seeking to pull this one off sort of thing. And so that gets into something that. Heavy on historical data and analyzing historical data, you know, like gives some sort of predictive value in the future, which is really what CPG's been doing for 40 years through charts and analytics and all sorts of other things. Because so much of our DNA is in historical data analysis and trying to give some idea what that historical data means for what's happening next. We felt like that was specifically the area we needed to focus in because that's what CPG does. And just from like a knowledge perspective, it's one of those things that if somebody was going to solve that problem, thought probably we had the best. Gets to be the one to do it. What data sets did you use to build it? We don't use any customer trade data. Nothing. Anything outside of just actual exchange market data that comes off the wire. How deep does the market data go? It's all the marketplace order individual raw messages off the exchange. So we store SQG in general, we store that information so that we can plot charts and stuff. So we already had that historical data. So that's when we trained on how are things going with CQG 1. Going into our second year, really having CG, one is offering people start to find out about it. The fact that there's an HTML5, it's new, it's fresh looking. We have a new way about adding different features to it. They can make it really, really a rich offering institutions as well as you know any other trading groups. But institutional especially like the likeness to it, the ease of using it, all that package in the way we've talked over the years about some of the work that we did building execution algos and all that. All of that is integrated into the CG1 platform. So it's designed to be an institutional tool. So people were having the conversations with like Pat said. And a largely institutional trade desks and stuff. The feedback has been overwhelmingly positive. How is CQG getting into the equities and equity options space there? Right. You can't let that opportunity go by. I mean, yeah, sure. CPG in the 40 years, 44 years of being around we're futures and options wouldn't. Mom and dad's CGI anymore we have to be really going almost the full gamut of having just about everything you could have it. It's the only way you're going to survive. We've always been known for their connectivity with all the exchange connectivity probably more so than anybody. But now it comes down to OK, what else do you have? Platform has been multi asset for many years, but it's just that we've had a really specific focus on the futures and options on future space we're fighting is our customers are. Meeting more multi asset offerings, they want to trade more than one thing. They don't want to have two things up to do it. And so in order to make sure that their workflow is clean and efficient, like we, you know, we felt like it's something that we needed to take a more serious look into the equity and equity option space. Equity options has some challenges because there's so much data that comes out. And so it just kind of actually forced us to kind of re architect some of the sides of CPG to handle that level of information and display it in a way that we thought gave customers out of an edge. What else can we expect from? CQG this year you're going to see some pretty key partnerships we'll be announcing as the year goes on. Primary way the CG goes to markets through partnerships. We don't do a lot of direct customer business. We partner with seems, we partner with other technology companies, API customers of ours, our primary business models, working with others to help the industry be successful in the traders be successful if you're going to see some. Really notable partnerships that will be announcing as the year goes on our business. Kind of talking back to the CG1 stuff and the institutional side of things. I think you're going to see that the CG physicists becoming considerably more diverse than it has been in the past. So that the work that we do in retail is always going to be really substantial part of our business. The commercial hedging side, the prop side and I think especially on the institutional side, forward-looking that you're going to see some really notable finishes. Would CQG ever consider going public via a SPAC? It's really, really important to us that CGI remains privately held by its employees and the other way beyond. So the way that we make decisions, the way we build our products, the way we could focus on the customer, for those things to be true to CDG values, we have to say as we are and for our customers, that way we are neutral. You know, you have to. So it's not a consideration.
