Trading Order Replenishment via Segmented Display Quantities
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Solution Overview
Problem
Existing electronic trading systems fail to effectively disguise the actions of traders when placing large orders, leading to potential market manipulation and transparency issues.
Innovation Solution
A system that uses formulas to determine and manage displayed and reserved quantities of trading orders, generating random values to incrementally fill orders and disguise the trader's actions, thereby masking large transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If a trader places a large order in a single transaction, then the trader's intent is clear and execution is efficient, but the trader's actions become easily detectable and vulnerable to market manipulation
Solution Approach 1:
The patent segments a large trading order into multiple smaller displayed quantities that are executed incrementally. Instead of displaying the full large order quantity at once, the system displays smaller portions sequentially, making it difficult for other market participants to detect the full extent of the trader's intent while still allowing the large order to be executed efficiently over time.
2Loss of information
If a trader displays the full quantity of a large order, then other traders can see the complete intent, but this creates transparency issues and potential manipulation opportunities
Solution Approach 1:
The patent implements dynamic adjustment of displayed quantities, where the amount displayed to the market changes over time rather than remaining static. The system dynamically modifies what portion of the large order is visible to other traders at any given moment, balancing transparency needs with manipulation prevention by adapting the displayed information based on execution progress and market conditions.
Data Source
AI summary
A system for replenishing trading orders comprises a memory coupled to a processor. The memory stores a trading order comprising a total quantity of a product, and at least one formula to determine a displayed quantity for the trading order. The processor applies the formula to determine the displayed quantity. The processor further determines a reserved quantity based on the determined displayed quantity and the total quantity. The processor communicates the trading order having the determined displayed quantity and the determined reserved quantity.