Trading Exchange Architecture for Low-Latency Order Matching
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Solution Overview
Problem
Current trading systems face delays in matching orders and executing trades due to communication bottlenecks, leading to suboptimal trading results, especially when multiple participants react to events simultaneously.
Innovation Solution
Implementing a trading exchange architecture with a matching engine, event engine, and dedicated communication networks to prioritize and quickly process order matching and event-driven trades, allowing for real-time execution of trades based on condition satisfaction.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If a centralized trading system is used to match orders, then order matching can be performed, but communication delays and bottlenecks occur when multiple participants react simultaneously
Solution Approach 1:
The patent segments the centralized trading system into multiple independent matching engines distributed across different servers. Each matching engine handles a subset of orders independently, allowing parallel processing of multiple trades simultaneously. This segmentation eliminates the single-point bottleneck and reduces communication latency by distributing the matching workload across multiple nodes in the network.
Solution Approach 2:
The patent introduces a new dimensional approach by implementing event-driven architecture that adds a temporal dimension to order matching. Events are processed in real-time as they occur, and matching engines respond immediately to event streams without waiting for batch processing cycles. This dimensional shift from sequential batch processing to parallel event-stream processing significantly reduces communication delays.
2Productivity
If standard communication networks are used for trade execution, then system simplicity is maintained, but trading efficiency decreases due to communication bottlenecks
Solution Approach 1:
The patent introduces dedicated communication networks as intermediary layers between matching engines and participants. These specialized networks act as mediators that optimize the transmission of trade-related information, providing prioritized channels for time-sensitive messages. The intermediary networks handle protocol translation and message routing, improving execution efficiency while abstracting the complexity from the core matching logic.
3Reliability
If all orders are processed equally without prioritization, then fairness is maintained, but event-driven trades experience delays
Solution Approach 1:
The patent implements local quality differentiation by assigning different priority levels to different types of orders and messages within the system. Event-driven trades receive higher priority local treatment in terms of message queue positioning and processing scheduling, while maintaining overall system fairness through transparent priority rules. This localized quality adjustment ensures critical events are processed immediately without compromising the integrity of the trading system.
Data Source
AI summary
Various embodiments of exchanges are described. Methods and other embodiments are also described.