Exchange Event Feed Triggering for Low-Latency Conditional Trading
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Solution Overview
Problem
Existing algorithmic trading systems face limitations due to latency and bandwidth constraints in processing market and non-market data, leading to inaccurate and delayed trading decisions.
Innovation Solution
A system that allows traders to submit conditional orders based on external events, using a standardized event feed to trigger orders within an exchange, reducing latency and enhancing accuracy by processing orders internally without relying on external telecommunications.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Speed
If algorithmic trading systems use external telecommunications service providers to transmit data and orders, then the systems can access market data and execute trades, but the systems suffer from latency and bandwidth constraints that delay trading decisions
Solution Approach 1:
The patent extracts the event monitoring function from external telecommunications systems and places it directly within the exchange infrastructure. The exchange now natively receives, processes, and acts upon event data without requiring external data transmission, eliminating the latency associated with telecommunications service providers while maintaining the ability to execute trades based on market and non-market events
Solution Approach 2:
The exchange acts as an intermediary that directly receives event data feeds and internally triggers conditional orders. By positioning the exchange as the central mediator between event sources and trading execution, the system eliminates the need for external telecommunications transmission, reducing latency while preserving the intermediary's role in matching and executing trades
2Measurement precision
If traders use personal computers to scan live news feeds for trading signals, then they can identify trading opportunities based on external events, but the systems suffer from inaccurate scans that result in incorrect trades
Solution Approach 1:
The patent segments the event detection function into dedicated exchange-based modules that separately handle data reception, parsing, and order triggering. This segmentation allows each component to specialize in its function, improving overall accuracy. The exchange's specialized event processing infrastructure provides more reliable event detection and trade execution compared to general-purpose personal computer systems
Solution Approach 2:
The exchange provides self-service event monitoring and order triggering capabilities directly to traders through conditional order functionality. Traders submit conditional orders to the exchange, which then autonomously monitors for triggering events and executes orders when conditions are met, eliminating the need for traders to independently scan and interpret news feeds while improving both accuracy and reliability
3Speed
If trading systems rely on high-bandwidth telecommunications service providers to reduce latency, then they can improve trading speed, but the systems increase operational complexity and cost
Solution Approach 1:
The patent merges the event processing and order execution functions into a single integrated exchange system. By combining data reception, event analysis, conditional order management, and trade execution within the exchange infrastructure, the system eliminates the need for separate high-speed telecommunications infrastructure while achieving comparable or superior execution speeds through internal processing
Data Source
AI summary
Networks, systems, and methods for event triggered trading of investment vehicles are disclosed. Orders that are conditioned upon events occurring outside a market may be submitted to an exchange. The conditional orders may be held or stored until the occurrence or non-occurrence of the event. An event data feed is provided to provide information identifying the occurrence or non-occurrence of the event. In response to receiving information via the data feed identifying the event, the orders conditioned upon the event will be triggered, matched, and executed.