Order Inheritance System for Financial Trading Queue Position Transfer
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Solution Overview
Problem
Current financial trading systems lack the ability for traders to hand off orders to other traders, especially in first-in first-out markets, leading to inefficiencies when a trader needs to abandon a favorable queue position without being physically present, as there is no mechanism to transfer or inherit orders across different accounts or entities.
Innovation Solution
Implementing an order inheritance system that allows traders to electronically tag soon-to-be-abandoned orders, enabling other traders within the firm or exchange users to bid on and inherit these orders, with mechanisms for prioritization and payment structures, thereby allowing queue position to be selectively purchased on demand.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a trader places an order to obtain a favorable queue position, then the trader gains priority in order execution, but the trader must maintain physical presence and continuously monitor the market to preserve this position
Solution Approach 1:
The system allows orders to be tagged for inheritance, enabling the order to be automatically transferred to another trader without manual intervention. The tagged order itself serves the function of being inheritable, eliminating the need for continuous trader monitoring and physical presence while preserving the queue position.
Solution Approach 2:
The order inheritance system acts as an intermediary mechanism between the original trader and potential inheriting traders. The tagging system and inheritance protocol mediate the transfer of queue position, allowing the original trader to abandon the position while another trader automatically assumes it, resolving the conflict between maintaining priority and trader availability.
2Productivity
If a trader cancels an order to abandon a queue position, then the trader frees up capital and attention, but the favorable queue position is lost and cannot be transferred to other traders
Solution Approach 1:
Instead of completely discarding the queue position when a trader cancels an order, the system allows the position to be recovered by another trader through the inheritance mechanism. The tagged order is discarded by the original trader but recovered by an inheriting trader, preserving the value of the queue position while allowing the original trader to move on to other opportunities.
Solution Approach 2:
The inheritance system serves as an intermediary that captures the value of the abandoned queue position and makes it available to other traders. Rather than the position simply disappearing when cancelled, the intermediary mechanism transfers it to willing inheritors, maintaining market efficiency and liquidity.
3Speed
If traders compete for favorable queue positions through co-location and high-speed telecom investments, then execution speed and priority are improved, but market costs increase and accessibility decreases
Solution Approach 1:
The order inheritance system creates a disposable mechanism for acquiring queue position advantage. Instead of requiring permanent, expensive infrastructure investments like co-location, traders can temporarily inherit queue positions through the tagging system. This disposable approach to gaining execution priority eliminates the need for costly permanent infrastructure while maintaining speed advantages.
Solution Approach 2:
The system changes the parameter of how queue position is acquired from physical infrastructure investment to electronic inheritance. By transforming the mechanism from hardware-based (co-location, high-speed telecom) to software-based (electronic tagging and inheritance), the system maintains execution speed while dramatically reducing device complexity and investment requirements.
Data Source
AI summary
Systems and methods for order inheritance and order transfer are provided. In one embodiment, a user submits an order through trading platform. The order is then added to an order queue for execution on financial market. Once a trader has achieved a queue position, various embodiments allow the trader to indicate that the order is available for inheritance or transfer. Various display indicators may be used to notify other traders that the order and queue position are available. A new owner can be selected and the order ownership can be transferred. Other features are disclosed herein.