Embedded Hardware Risk Assessment System for Low Latency Trading
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Solution Overview
Problem
Current computer hardware designs introduce significant latency in market data processing, risk assessment, and trading operations due to the communication delays between internal and external components, limiting the ability to achieve zero latency in financial market systems.
Innovation Solution
An embedded hardware-based system utilizing Programmable Logic Devices (PLDs), such as Complex Programmable Logic Devices (CPLD), Field Programmable Gate Arrays (FPGA), or Application-Specific Integrated Circuits (ASIC) microchips, which write market data, trading, and risk applications directly onto modules, reducing latency by eliminating the need for kernel communication and utilizing VHDL for concurrent operations.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of time
If standard computer hardware with kernel-based operating systems is used, then system reliability and ease of operation are maintained, but communication latency between components increases significantly
Solution Approach 1:
The patent merges market data processing, risk assessment, and trading functions into a single integrated PLD module, eliminating the need for inter-component communication via kernel. All functions operate within the same hardware boundary, reducing latency by removing communication overhead between separate components.
Solution Approach 2:
The patent replaces the mechanical/software-based kernel communication system with direct hardware-level signal processing in PLD. This substitution eliminates the layers of software abstraction and kernel mediation, achieving near-instantaneous data processing without the latency inherent in traditional operating system architectures.
2Loss of time
If software applications are written in standard languages (Java, C++), then ease of manufacture and adaptability are improved, but functional latency increases
Solution Approach 1:
The patent substitutes software-based processing with hardware-based logic implementation in PLD using VHDL. This replacement eliminates the interpretation and execution overhead of software languages, achieving deterministic low-latency processing while maintaining programmability through hardware description languages.
Solution Approach 2:
The patent changes the fundamental parameter of execution medium from software to hardware. By implementing logic directly in PLD circuits rather than executing instructions through software interpreters, the system achieves orders-of-magnitude reduction in functional latency while maintaining the ability to modify behavior through reconfiguration.
3Loss of time
If multiple internal components communicate via kernel, then system adaptability and ease of operation are maintained, but overall system latency increases
Solution Approach 1:
The patent combines multiple functions (market data reception, risk calculation, trading decision-making) into a single PLD module, eliminating inter-component communication latency. The merged architecture processes all functions in parallel within the same hardware boundary, achieving ultra-low latency while maintaining functional versatility.
Solution Approach 2:
The PLD module is designed to perform multiple functions (data processing, risk assessment, trading control) within a single universal hardware platform. This multi-functionality is achieved through configurable logic that can be programmed to handle different trading strategies and risk parameters, maintaining adaptability without requiring separate specialized components.
Data Source
AI summary
A risk assessment system and method are provided that may be implemented as an embedded hardware based system and method that provide real-time pre-trade risk assessments for multiple parties, in addition to real-time market data and trading connectivity to a variety of liquidity venues. The liquidity venues may include regulated exchanges, ECNs and other financial institutions listing securities, options, futures, commodities, foreign exchange and other financial instruments.