Configurable Order Entry And Matching Intervals for Exchange Coordination
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Solution Overview
Problem
Conventional electronic trading systems face challenges in efficiently matching contra-side orders due to the race for faster order placement, leading to increased infrastructure demands and potential gaming of the system by traders.
Innovation Solution
Decoupling order entry intervals from matching intervals, allowing traders to submit orders within a defined period, followed by a coordinated matching process that includes communication with other exchanges, reducing the incentive for rapid order placement and improving market efficiency.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If traders continuously place orders at high speed to reduce cycle time, then trading efficiency is improved, but infrastructure complexity and processing capability requirements increase
Solution Approach 1:
The patent segments the continuous order processing into discrete time intervals (ticks), where orders are accumulated during each interval and processed in batches. This segmentation reduces the processing burden on infrastructure by eliminating the need for continuous real-time processing of every individual order, thereby maintaining trading efficiency while reducing infrastructure complexity requirements.
2Speed
If traders race to place orders faster, then order matching speed is improved, but system stability deteriorates due to potential gaming
Solution Approach 1:
The patent implements periodic action by processing orders in discrete time intervals (ticks) rather than continuously. During each tick, orders are accumulated and then processed together in a coordinated manner. This periodic processing rhythm prevents the chaotic race conditions and gaming behaviors that arise from continuous high-speed trading, thereby maintaining order matching speed while improving system stability.
3Loss of time
If order entry and matching are performed simultaneously, then processing time is reduced, but coordination capability across multiple exchanges deteriorates
Solution Approach 1:
The patent segments the order processing into distinct phases: an order entry phase where orders are accumulated during a tick, and a matching phase where orders are processed. This segmentation creates a coordinated interval between entry and matching, which allows time for communication and coordination across multiple exchanges while minimizing overall processing time through batch operations.
Data Source
AI summary
Methods, system and articles of manufacture are disclosed including configurable order entry, matching, coordination and market data intervals. An example method to decouple order entry and matching of contra-side orders includes receiving a trade order during an order entry interval, wherein the order entry interval defines a first period. The example method also includes starting a matching interval at the expiration of the order entry interval, wherein the matching interval includes a second period and wherein the first period is contiguous to the second period. The example method further includes matching the trade order, during the matching interval, with one or more opposing tradable object trade orders received during the order entry interval, the trade order having a same price or same quantity as the one or more opposing trade orders.