Quote Engine Normalizes Order Prices for Trading Accuracy
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Solution Overview
Problem
Existing systems fail to effectively compare multiple orders and quotes in trading transactions by accounting for varying agency commissions, rebates, and transaction fees, leading to inequivalent trades despite similar prices.
Innovation Solution
A quote engine that automatically adjusts order prices to reflect associated costs, such as agency commissions, rebates, and transaction fees, normalizing the prices and displaying them in a manner that accounts for user-specific cost data, enabling accurate comparison and sorting of orders.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If multiple orders with different agency commissions and transaction fees are displayed at their apparent prices, then the display is simple and straightforward, but the price comparison is inaccurate and misleading
Solution Approach 1:
The patent introduces a normalized price as an intermediary metric that mediates between the apparent price and the actual cost. This normalized price incorporates agency commissions, rebates, and transaction fees to create a true cost representation that enables accurate comparison while maintaining system simplicity through automated calculations.
Solution Approach 2:
The patent transforms the price parameter from its apparent form to a normalized form by applying cost adjustments. This parameter change converts the raw price into a true cost metric that reflects all associated expenses, enabling meaningful comparison across different orders with varying cost structures.
2Loss of information
If user-specific cost data is incorporated into price displays, then the true value of trades is accurately reflected, but the complexity of data retrieval and processing increases
Solution Approach 1:
The patent performs preliminary actions by pre-retrieving and storing user-specific cost data (agency commissions, rebates, transaction fees) before the price display is generated. This allows the normalized price calculation to proceed efficiently without real-time complexity, as the cost data is already available when needed.
Solution Approach 2:
The system performs self-service by automatically retrieving, processing, and applying user-specific cost data without requiring manual intervention. The normalized price calculation is automated, eliminating the need for users to manually input or calculate cost adjustments.
3Productivity
If orders are sorted by normalized price accounting for all costs, then the most valuable trades are identified, but the sorting and display process becomes more complex
Solution Approach 1:
The patent replaces manual trade evaluation mechanics with an automated sorting system that ranks orders by normalized price. This substitution eliminates the need for users to manually calculate and compare true costs, as the system automatically performs the evaluation and presents orders in optimal sequence.
Data Source
AI summary
Methods and systems are provided that include an order and/or quote engine that automatically adjusts bid, ask, or any other type of order prices to reflect some or all of the costs associated with a trade in an underlying item between a particular party receiving the order or orders accounting for specific costs associated with the party receiving the orders and in certain instances specific costs between the party receiving the order and the party submitting the order.