System and method for improved electronic trading

Abstract

A system and method is described herein for an exchange to act based on a market event on behalf of a trader. According to one aspect, a first electronic market can send orders to and / or manage orders at a second electronic market based on an internal and / or external market event on behalf of a trader. According to another aspect, an electronic market may manage orders in its own market based on an external market event on behalf of a trader. In particular, a trader, and exchange, or some other party can define an internal or external market event that comprises a condition and an action. Upon receiving internal and / or external information, when the market event condition is satisfied, the electronic market performs the action associated with the condition. An advantage, among many others, of the present embodiments is that it makes internal and external market influences and conditions visible to electronic markets to facilitate trading on behalf of a trader.

Description

BACKGROUND [0001] At one time, there were only open-outcry exchanges where traders, or more specifically buyers and sellers, would come together to trade in person. Recently, electronic exchanges have followed suit with the central evolutionary difference being the process of automatic and electronic matching of bids and offers. [0002] In particular, subscribing traders are connected to an exchange's electronic trading platform by way of a communication link and through an application program interface to facilitate real-time electronic messaging between themselves and the exchange. The electronic trading platform includes at least one electronic market, which is at the heart of the trading system for a particular market and handles the matching of bids and offers placed by the subscribing traders for that market. The electronic messaging includes market information that is sent from the electronic market to the traders. Once the traders receive market information, it may be display...

AI Technical Summary

Problems solved by technology

However, even the very best software tools at their trading terminals are limited in performance by the networks they communicate over.

In other words, if a trader's order is not at the electronic market, it will not be matched.

Otherwise, the offsetting order might sit in the market, and as a result, the trader can lose a significant amount of money, especially if the market price moves away from the offsetting order price.

This time delay can result in the trader's offsetting order being late to the market and missing out on an opportunity, therefore being “legged up.” There could also be unknown time delays due to network downtime or slow connection speeds between the exchanges 100 and 102 and client device 104.

Moreover, traders located geographically far from the electronic exchange may be at an unfair disadvantage from those traders who are located near the electronic exchange because of their possibly longer network transmission times. A similar total time delay may also be found even if the trader has chosen to offset his orders in different markets listed at the same exchange because the same actions taken will most likely need to occur.

In addition, comparable time delays may result when managing existing orders.

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