Anonymous Block Trade Matching System with Web-Based Benchmarks
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Solution Overview
Problem
Existing block trading systems lack the capability to submit orders using market peg benchmarks or future price cross benchmarks via web-based terminals and do not allow users to control which users receive order alerts, limiting negotiation capabilities and increasing transaction costs.
Innovation Solution
An anonymous block trade matching system that enables users to submit orders with market peg or future price cross benchmarks, restricts order data visibility based on user groups, and provides a two-way messaging interface for negotiation, while using flat rate and rebate/fee cost models.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If existing block trading systems are used, then continuous off-exchange crossing is provided, but the capability to submit orders using market peg benchmarks or future price cross benchmarks via web-based terminal is limited
Solution Approach 1:
The matching system is enhanced to support multiple order types including market peg benchmarks and future price cross benchmarks through a unified web-based terminal interface, allowing a single system to handle diverse trading strategies and benchmark types without requiring separate specialized systems
2Loss of information
If order alerts are distributed to all subscribers, then potential trading opportunities are communicated, but users cannot control which users receive alerts leading to information leakage
Solution Approach 1:
The system implements user-defined visibility settings that allow each user to specify which other users or user groups can receive their order alerts. This creates localized information distribution where each user's alert propagation is customized according to their specific confidentiality requirements and trading relationships
3Ease of operation
If proprietary trading platforms on proprietary data networks are required for negotiation, then negotiation capability is provided, but accessibility and ease of operation is limited
Solution Approach 1:
A web-based terminal application serves as an intermediary interface between users and the matching system, eliminating the need for proprietary trading platforms and data networks. The terminal provides negotiation and alert distribution capabilities through standard web technologies, making the system accessible through conventional internet browsers without requiring specialized hardware or software infrastructure
Data Source
AI summary
An anonymous block trade matching system which allows users that wish to cross large blocks of stock to submit orders, or indications of interest, with the option of utilizing market peg benchmarks or future price cross benchmarks. Orders submitted may be subject to minimum thresholds, including a threshold requiring that the order represent ‘X’ % of average daily volume. After submission of a firm order in the system, an alert may be generated to provide the order data to other users with potential to cross the order. Visibility of order data by other users may be restricted completely, or limited to a data interaction group to which the ordering user or the other user belongs.