Order Queue Positioning via Global Queue Holder Orders
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Traders in electronic trading environments lack the means to control and optimize the position of their orders in the order queue, leading to suboptimal placement and increased competition, as existing systems rely solely on first-in, first-out sequencing.
Innovation Solution
Implementing global queue holder orders that can be placed at multiple price levels with varying quantities and times, allowing traders to reserve positions and transfer ownership virtually to improve queue placement, with indications on trading screens to manage these orders.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Speed
If traders submit orders quickly in a FIFO matching system, then order entry speed is improved, but control over order queue position deteriorates
Solution Approach 1:
The system performs preliminary actions by pre-calculating optimal order queue positions and pre-positioning orders strategically in the queue before execution. The automated trading tool analyzes market conditions and competitor orders in advance, then places orders at predetermined optimal positions that maximize filling probability, rather than simply submitting orders as quickly as possible.
2Device complexity
If traders rely solely on FIFO sequencing, then system simplicity is improved, but order placement optimization deteriorates
Solution Approach 1:
The patent introduces an automated trading tool as an intermediary between the trader and the electronic exchange's FIFO matching system. This intermediary layer analyzes market conditions, calculates optimal order positions, and strategically places orders to optimize queue placement, thereby enhancing productivity without fundamentally changing the underlying FIFO matching mechanism.
3Adaptability or versatility
If multiple global queue holder orders are placed at different price levels, then order placement flexibility is improved, but system complexity deteriorates
Solution Approach 1:
The system segments the order placement strategy by creating multiple global queue holder orders at different price levels, each tailored to specific market conditions and trading objectives. This segmentation allows the trading system to adapt to various price scenarios and market movements independently, providing flexibility while managing complexity through modular order structures.
Data Source
AI summary
Systems and methods for optimizing order placement in an electronic trading environment are provided. Global queue holder orders are placed in a tradeable object to reserve quantity for traders. Traders may submit order requests for quantity at price levels at which a global queue holder order is holding quantity. When a trader submits an order for a quantity at a price level at which quantity is being held, a gateway compares the order to the global queue holder order information stored in a database. If the trader's order coincides with a price level at which quantity is held, then the gateway virtually transfers ownership of that quantity to the trader, who then assumes the advantageous queue position. When the quantity associated with the order is filled, the fill information is sent to the gateway, which to the database to determine which trader is associated with the filled order quantity.