Automated Coordination for Multileg Trading Execution
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Current stock exchanges do not support electronic multileg trading, leading to insufficient coordination and precision in price matches for complex trades, which limits the use of multileg transactions in financial markets.
Innovation Solution
Automated techniques for coordinating and executing compound requests in data processing systems, where individual requests are processed in a specific order and only executed if all requests within the compound request can be fulfilled, minimizing communication between nodes and optimizing node assignments based on request frequencies.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Speed
If multileg trades are executed manually on exchange floors with trader signaling, then coordination between different legs can be achieved, but the trading speed is slow and response time is prolonged
Solution Approach 1:
The patent replaces manual mechanical signaling between traders with an automated electronic coordination system. The matching engine automatically coordinates execution across multiple legs of a multileg trade by receiving a single compound order, determining executability of all legs, and executing them atomically without requiring manual trader intervention or signaling.
Solution Approach 2:
The system enables self-service by allowing the multileg trade coordination to occur autonomously through the matching engine. The engine independently evaluates the executability of each leg, makes coordination decisions, and executes the trade without external human intervention, thereby increasing speed while managing complexity through automation.
2Measurement precision
If current brokerage support for multileg trades is implemented, then some multileg functionality is available, but price match precision is insufficient and approximate matches are required
Solution Approach 1:
The patent applies preliminary action by determining the executability of all legs of a multileg trade before execution. The matching engine evaluates whether each leg can be executed at the requested price before committing to the trade, ensuring precise price matching. Only if all legs are executable does the system proceed with execution, eliminating the need for approximate matches.
Solution Approach 2:
The system segments the multileg trade into individual legs that are evaluated separately for executability. Each leg is assessed independently against the requested price criteria, allowing precise price matching for each component while maintaining the atomic execution of the entire compound order.
3Reliability
If compound requests are processed by checking executability of individual requests in sequence, then precise coordination is achieved, but processing time increases due to multiple checks
Solution Approach 1:
The patent performs preliminary executability checks for all individual requests within a compound order before execution. The matching engine determines whether each leg can be executed based on current market state before committing to the trade, ensuring reliability while completing all checks in a coordinated manner to minimize processing time.
Solution Approach 2:
The system merges the executability determination process for all legs of a compound order into a single coordinated evaluation. Rather than processing legs completely independently, the engine evaluates them together as part of the same compound order, allowing for efficient use of market state information and reducing redundant checks.
4Productivity
If electronic multileg trading is implemented with automated coordination, then trading speed and precision are improved, but system complexity increases
Solution Approach 1:
The patent implements a universal coordination mechanism within the matching engine that handles multileg trades through the same fundamental processes used for single-leg trades. The engine receives compound orders, determines executability of individual legs, and executes atomically, using existing matching infrastructure rather than requiring completely separate specialized systems.
Solution Approach 2:
The matching engine acts as an intermediary that coordinates between multiple legs of a compound order. It receives the compound order, evaluates each leg against market state, makes coordination decisions, and executes the trade atomically, thereby managing complexity through a centralized mediation point rather than requiring complex peer-to-peer coordination between legs.
Data Source
AI summary
Automated techniques are disclosed for minimizing communication between nodes in a system comprising multiple nodes for executing requests in which a request type is associated with a particular node. For example, a technique comprises the following steps. Information is maintained about frequencies of compound requests received and individual requests comprising the compound requests. For a plurality of request types which frequently occur in a compound request, the plurality of request types is associated to a same node. As another example, a technique for minimizing communication between nodes, in a system comprising multiple nodes for executing a plurality of applications, comprises the steps of maintaining information about an amount of communication between said applications, and using said information to place said applications on said nodes to minimize communication among said nodes.