Equation-Based Transaction Messaging for Financial Data Processing

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Solution Overview

Problem

Data transaction processing systems face increased processing latency due to large volumes of electronic data transaction request messages, particularly when dealing with interrelated derivative instruments, which require significant computing resources and frequent updates as market conditions change.

Innovation Solution

Implementing equation-based electronic data transaction request messages that define relationships between variables, allowing multiple transactions to be conveyed in a single message, reducing message volume and enabling automatic adjustments to changing market conditions without the need for individual message modifications.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Measurement precision

If traditional discrete-value-based electronic data transaction request messages are used to trade derivative instruments, then each specific transaction can be processed accurately, but the volume of messages increases significantly, causing increased processing latency and system overload

Engineering Contradiction:

Improvetransaction processing accuracyVSAvoidprocessing latency

Core Design Contradiction:

Measurement precisionVSLoss of time

Solution Approach 1:

The patent combines multiple discrete transaction requests into a single equation-based message. Instead of sending separate messages for each derivative instrument transaction, the system consolidates multiple transactions into one message containing mathematical equations that define the relationships between variables (prices, quantities, instrument parameters). This merging reduces message volume and processing latency while maintaining the precision of individual transaction processing through equation evaluation.

Inventive Principle:

Principle #5Merging (Combining)

2Loss of information

If individual messages are sent for each derivative instrument transaction, then specific transaction details are preserved, but the data transmission volume increases, causing network congestion and increased processing resources required

Engineering Contradiction:

Improvetransaction detail informationVSAvoiddata transmission volume

Core Design Contradiction:

Loss of informationVSQuantity of substance

Solution Approach 1:

The patent transforms the representation of transaction data by changing from discrete value parameters to equation-based parameters. Instead of transmitting individual price and quantity values for each transaction, the system transmits mathematical equations that define relationships between these parameters. This parameter transformation reduces data transmission volume while preserving all necessary transaction information, as the equations can be evaluated to recover specific transaction details when needed.

Inventive Principle:

Principle #35Parameter changes

3Reliability

If the data transaction processing system processes each message individually, then each transaction is handled accurately, but computing resources are exhausted and processing speed decreases

Engineering Contradiction:

Improvetransaction processing reliabilityVSAvoidtransaction processing throughput

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The patent performs preliminary action by pre-defining transaction relationships using mathematical equations before actual execution. The equation-based messages establish the logical framework and relationships between transactions in advance, allowing the processing system to evaluate multiple transactions simultaneously rather than sequentially. This preliminary structuring of transaction logic enables parallel processing and improves throughput while maintaining reliability through systematic equation evaluation.

Inventive Principle:

Principle #10Preliminary action

4Adaptability or versatility

If multiple derivative instruments based on common underlying instruments are traded separately, then each instrument's specific conditions are met, but the number of messages required increases, overwhelming the processing system

Engineering Contradiction:

Improveinstrument-specific trading flexibilityVSAvoidmessage processing complexity

Core Design Contradiction:

Adaptability or versatilityVSDevice complexity

Solution Approach 1:

The patent implements universality by creating a single equation-based message format that can handle multiple different derivative instruments simultaneously. The mathematical equations are designed to be instrument-agnostic, capable of representing relationships across various derivative types (options, futures, swaps) that share common underlying instruments. This universal message structure reduces processing complexity while maintaining the ability to adapt to specific instrument requirements through parameter customization within the equations.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Data Source

PatentUS20200193519A1Equation-based transaction request messaging and transaction processing

Publication Date: 2020.06.18 CHICAGO MERCANTILE EXCHANGE INC

AI summary

A data transaction processing system receives and processes equation-based electronic data transaction request messages. Transmitting equation-based electronic data transaction request messages that represent a large series of discrete values reduces the data transmission to the data transaction processing system. Processing equation-based electronic data transaction request messages instead of a series of discrete values reduces the amount of time need to perform transactions, greatly reducing processing latency. Equation-based electronic data transaction request messages can also be efficiently updated by modifying equation parameters, again reducing the amount of data transmitted to the data transaction processing system.