Virtual OTC Exchange System for Market Data Standardization
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Solution Overview
Problem
Over-the-counter (OTC) derivative markets face inefficiencies due to lack of standardization, non-uniform contract descriptions, and manual data management, leading to difficulties in real-time data aggregation, accuracy, and compliance, which hampers traders' ability to analyze and execute trades effectively.
Innovation Solution
A virtual OTC exchange system that standardizes market data, automates its distribution, and provides real-time aggregation through a workstation with message parsing, recognition, and communication tools, enabling secure and compliant data exchange and post-trade functions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If manual data collection and formatting methods are used in OTC markets, then traders can maintain flexibility in communication, but data aggregation efficiency and analysis speed deteriorate significantly
Solution Approach 1:
The patent replaces manual mechanical processes of data collection, formatting, and analysis with an automated computer-based system. The system automatically collects market data from multiple sources, parses unstructured messages, standardizes formats, and delivers structured data to traders, eliminating the need for manual spreadsheet composition and data reformatting while maintaining communication flexibility
Solution Approach 2:
The system enables self-service by automatically performing data collection, parsing, standardization, and delivery functions without requiring trader intervention. The automated platform continuously gathers data from multiple brokers, processes it through parsing algorithms, and pushes standardized data to users, freeing traders from burdensome manual data management tasks
2Adaptability or versatility
If multiple brokers provide quotes in different formats, then market coverage and versatility improve, but data standardization and analysis complexity worsen
Solution Approach 1:
The patent creates a universal data standardization layer that handles multiple broker formats through a single integrated system. The parsing module recognizes and processes various message formats from different brokers, converting them all into a standardized structured format, allowing the system to serve multiple market sources without requiring separate processing for each format
Solution Approach 2:
The system introduces an intermediary standardization layer between diverse broker data sources and trader analysis systems. This intermediate parsing and formatting module acts as a mediator that translates various broker-specific formats into a common standardized structure, simplifying the interface complexity that traders would otherwise face when dealing with multiple brokers
3Reliability
If real-time data aggregation from multiple sources is implemented, then market transparency and information accuracy improve, but system complexity and data processing requirements worsen
Solution Approach 1:
The patent segments the complex data aggregation system into distinct functional modules: data collection components that gather messages from multiple brokers, parsing modules that process unstructured data, standardization layers that format data consistently, and delivery systems that distribute structured data. This segmentation manages system complexity by organizing functions into separate, manageable components while maintaining real-time aggregation capabilities
Data Source
AI summary
A system and a method for collecting and using market data. The system includes a workstation, where at least one message is entered, a transmitter, where the at least one message is transmitted, a parser for parsing the at least one message, a data recognizer for identifying relevant information in the at least one message, a processor for extracting the relevant information and a communicator for communicating the relevant information.