Order Matching System

Abstract

A order matching system which allows users to define and modify buy / sell order schedules for execution within one or more transaction destinations. The system uses order schedules and associated evaluation heuristics to evaluate and update order characteristics such as price and quantity based on user-specified criteria. The matching system comprises a user interface which can be connected over the internet to various transaction destinations through a schedule manager and a transaction order interface. The user interface provides users with the ability to obtain information concerning the status of their order account as well as the ability to enter or modify their order schedules. The order manager uses a schedule supervisor server to maintain a database containing order schedules and order status information and to execute variable evaluations on the basis of these order schedules and associated evaluation heuristics. The order manager also uses a transaction supervisor server to monitor the status of order fills and to update the database periodically. The transaction order interface receives and communicates information messages between various transaction destinations and the schedule manager. In this way, the order matching system allows users to specify the ways that various terms and conditions at which they are willing to transact may change over time in an automated fashion while still retaining the ability to intervene at any time.

Description

[0001] This application is a continuation of U.S. patent application Ser. No. 09 / 770,108, filed Jan. 25, 2001, which claims priority from U.S. Provisional Application No. 60 / 177,649, filed Jan. 27, 2000.FIELD OF THE INVENTION [0002] This invention relates generally to computer based trading and auction systems, and more particularly to an improved order matching system. BACKGROUND OF THE INVENTION [0003] Traders and investors in securities, commodities and other items send their buy and sell orders to centralized exchanges seeking the best combination of publicly disclosed price and depth of liquidity. However, liquidity in many markets appears sporadically due to the fact that buy orders and sell orders do not necessarily arrive at the same times, which causes prices to fluctuate in an ongoing search for price-liquidity equilibrium. Also, any sizable order arriving in a centralized market has the potential to change the equilibrium by indicating to participants the presence of a ne...

AI Technical Summary

Benefits of technology

The system enables users to specify order preferences and criteria in advance, reducing the time required for order execution and improving transaction satisfaction by ensuring orders are executed at optimal prices and quantities, thereby enhancing the efficiency of order management across multiple liquidity destinations.

Problems solved by technology

However, liquidity in many markets appears sporadically due to the fact that buy orders and sell orders do not necessarily arrive at the same times, which causes prices to fluctuate in an ongoing search for price-liquidity equilibrium.

One disadvantage inherent in order matching systems is that orders may be committed to a destination that does not happen to attract the appropriate liquidity at the right moment, while liquidity is available at other destinations.

Further, the increasing number of exchange destinations reduces the prospects of success in the search for liquidity.

This in turn has actually made the job of those responsible for executing transactions more labour intensive and time consuming as increased monitoring time is required to utilize these alternatives to the regular centralized exchanges.

As a result, there is a tendency for traders to executing trades, while maintaining within the user imposed price and quantity ranges, at less desirable order prices and quantities as the user imposed deadline for trading approaches.

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