Anonymous Order Matching System for Liquidity and Integrity
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Solution Overview
Problem
Current trading systems face challenges in maintaining market liquidity and preventing market manipulation by keeping secret orders hidden from public view, which can lead to asymmetric information and potential market gaming.
Innovation Solution
Implementing a trading system that allows for anonymous firm order execution and matching within an Order Management System (OMS), where buy side participants can view and match firm orders without revealing their identity, thereby increasing market liquidity and reducing the chances of gaming.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If secret orders are kept hidden from public view, then market manipulation is prevented, but asymmetric information arises leading to market gaming
Solution Approach 1:
The patent introduces an intermediary mechanism (anonymous order matching system) that allows order information to be shared without revealing participant identities. The system acts as a mediator between buyers and sellers, enabling transparent matching while preserving anonymity through techniques like order hashing and blinded communication protocols.
Solution Approach 2:
The patent segments order information into multiple components: public elements (order type, asset, price, quantity) and private elements (participant identity, exact timing). This segmentation allows selective disclosure where essential market data is transparent while sensitive identifying information remains protected through cryptographic techniques and anonymization layers.
2Productivity
If anonymous firm order execution is implemented, then market liquidity increases, but system complexity increases
Solution Approach 1:
The patent replaces traditional mechanical trading systems (manual order entry, visible order books, direct participant communication) with electronic and cryptographic mechanisms. Anonymous order matching is achieved through automated algorithms, cryptographic hashing, and electronic message passing protocols that eliminate the need for complex human coordination while maintaining security.
Solution Approach 2:
The patent creates cryptographic copies and representations of order information that can be shared anonymously. Order hashes, blinded order representations, and cryptographic proofs serve as copies that contain sufficient information for matching purposes without exposing sensitive data, enabling liquidity provision without identity revelation.
3Reliability
If order anonymity is maintained, then market manipulation is reduced, but order matching difficulty increases
Solution Approach 1:
The patent implements feedback mechanisms where the system continuously monitors matching outcomes, order flow patterns, and market dynamics. Anonymous orders generate feedback signals (matching confirmations, price impact measurements, volume data) that allow the system to adjust matching algorithms and maintain efficiency without compromising participant anonymity.
Solution Approach 2:
The patent changes key parameters of the order matching process: instead of matching on exact price and time, anonymous matching uses price ranges, time windows, and cryptographic proof equivalence. The system transforms the matching problem from precise parameter comparison to probabilistic and cryptographic verification, reducing complexity while maintaining fairness.
Data Source
AI summary
A method and system for order management that allows access to additional pools of liquidity is described. Other embodiments are also described.