Methods and Systems for Implementing Market Making Strategies at Low Latency

Abstract

Disclosed herein are automated trading engine embodiments that operate on market data and re-engineer trading logic to operate on computational resources that are capable of providing highly parallelized and pipelined processing operations to improve tick to trade latency. As an example, logic resources for the automated trading engine can implement multiple market making strategies that post and cancel quotes on markets. Examples of market making strategies that can be implemented by the automated trading engine include basic market making, joining market making, and bettering market making. Further still, the market making strategies can be driven by low latency derivative pricing.

Description

CROSS-REFERENCE AND PRIORITY CLAIM TO RELATED PATENT APPLICATIONS

[0001] This patent application claims priority to U.S. provisional patent application Ser. No. 63 / 149,904, filed Feb. 16, 2021, and entitled “Methods and Systems for Low Latency Automated Trading”, the entire disclosure of which is incorporated herein by reference.

[0002] This patent application is related to (1) U.S. patent application Ser. No. ______, filed this same day, and entitled “Methods and Systems for Market Making at Low Latency” (said patent application being identified by Thompson Coburn Attorney Docket Number 44826-215369), (2) U.S. patent application Ser. No. ______, filed this same day, and entitled “Methods and Systems for Joining Market Making at Low Latency” (said patent application being identified by Thompson Coburn Attorney Docket Number 44826-217124), (3) U.S. patent application Ser. No. ______, filed this same day, and entitled “Methods and Systems for Bettering Market Making at Low Latency” (said ...

Examples

Embodiment Construction

[0079]The example embodiments of the invention that are described herein implement automated trading strategies that operate at 10 to 100 times faster than the state of the art by using novel and innovative system architectures and integrated circuits for latency-critical functions. These embodiments may be used for automated trading of any financial instrument by both “buy side” and “sell side” market participants. Relevant buy side market participants include proprietary (or principal) traders who invest their own capital and asset managers (or funds) who invest capital from clients. Relevant sell side market participants include brokers, both institutional and retail, and banks.

[0080]While the automated trading techniques described herein can be used to support trading of financial instruments such as stocks, it should be understood that they are particularly useful for supporting trades in derivative financial instruments Trading derivatives, such as stock options and future opt...

CROSS-REFERENCE AND PRIORITY CLAIM TO RELATED PATENT APPLICATIONS

[0001] This patent application claims priority to U.S. provisional patent application Ser. No. 63 / 149,904, filed Feb. 16, 2021, and entitled “Methods and Systems for Low Latency Automated Trading”, the entire disclosure of which is incorporated herein by reference.

[0002] This patent application is related to (1) U.S. patent application Ser. No. ______, filed this same day, and entitled “Methods and Systems for Market Making at Low Latency” (said patent application being identified by Thompson Coburn Attorney Docket Number 44826-215369), (2) U.S. patent application Ser. No. ______, filed this same day, and entitled “Methods and Systems for Joining Market Making at Low Latency” (said patent application being identified by Thompson Coburn Attorney Docket Number 44826-217124), (3) U.S. patent application Ser. No. ______, filed this same day, and entitled “Methods and Systems for Bettering Market Making at Low Latency” (said ...

Examples

Embodiment Construction

[0079]The example embodiments of the invention that are described herein implement automated trading strategies that operate at 10 to 100 times faster than the state of the art by using novel and innovative system architectures and integrated circuits for latency-critical functions. These embodiments may be used for automated trading of any financial instrument by both “buy side” and “sell side” market participants. Relevant buy side market participants include proprietary (or principal) traders who invest their own capital and asset managers (or funds) who invest capital from clients. Relevant sell side market participants include brokers, both institutional and retail, and banks.

[0080]While the automated trading techniques described herein can be used to support trading of financial instruments such as stocks, it should be understood that they are particularly useful for supporting trades in derivative financial instruments Trading derivatives, such as stock options and future opt...

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