Swap Crossing Windows to Block Interloping Orders
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Solution Overview
Problem
Existing marketplaces struggle to efficiently facilitate swap contract trades by ensuring the best possible price for participants while managing timing constraints and potential interloping orders.
Innovation Solution
A trading apparatus that constrains the facilitation of swap contract requests for a specified time period after an initial announcement, allowing execution only if no better price is found, and enables execution through a clearinghouse identified by a ticker symbol, with options for re-announcement and extended submission periods.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Speed
If the system immediately facilitates cross requests upon receiving swap contract indications, then trade execution speed is improved, but trade execution quality deteriorates because better prices or time priorities may be missed
Solution Approach 1:
The system performs preliminary actions by announcing potential crossings to the market before facilitating the actual cross request. This advance announcement allows other market participants to respond with better prices or competing orders, ensuring the system captures optimal execution quality while maintaining timely processing through structured facilitation windows.
2Manufacturing precision
If the system intentionally delays facilitation of cross requests, then trade execution quality is improved by allowing time for better prices to emerge, but trade execution speed deteriorates
Solution Approach 1:
The system implements periodic action through structured facilitation windows that open at predetermined intervals after the announcement. These periodic facilitation opportunities allow the system to balance execution quality improvement through delayed processing with maintaining overall market speed through regular, predictable crossing opportunities.
3Productivity
If the system allows continuous facilitation of cross requests, then trade execution opportunities are maximized, but market fairness deteriorates due to potential manipulation and lack of transparency
Solution Approach 1:
The system segments the cross facilitation process into distinct phases: an announcement period where potential crossings are disclosed to the market, followed by structured facilitation windows with predetermined time limits. This segmentation creates transparency and prevents manipulation by clearly defining when and how crosses can be executed, while still providing multiple opportunities for trade execution.
4Loss of information
If the system provides extensive announcement time for potential crossings, then market transparency is improved, but trade execution efficiency deteriorates due to prolonged delays
Solution Approach 1:
The system changes the time parameter dynamically by implementing structured facilitation windows with predetermined time limits that balance transparency and efficiency. The announcement period provides necessary market transparency, while the subsequent facilitation windows are time-constrained to prevent excessive delays, creating an optimal balance between information dissemination and execution speed.
Data Source
AI summary
An exchange through which swap contracts may be traded. Embodiments may allow a trader to announce a potential crossing before the crossing is requested. The user may then request the crossing between two parties. An announcement window may be kept open through a chaining of announcements. An interloper with a same price but better time than a party to the cross may be kept out of interloping in the cross. A ticker symbol system may list a clearinghouse to be used to execute a requested cross.