Automated Trading System Quote Screening
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Solution Overview
Problem
Current automated trading systems are inefficient for small value transactions, requiring excessive dealer intervention and generating high overhead due to the need for frequent quote and order message exchanges, which degrades system performance.
Innovation Solution
Implementing constraints on quote and order amounts, categorizing users, and using a computer trading system with quote screening, market view generation, and transaction processing to ensure only valid matches are processed, reducing unnecessary message flow and enhancing system performance.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If the system processes all quote and order messages without constraints, then trading flexibility is maintained, but system performance degrades due to excessive message flow
Solution Approach 1:
The patent introduces minimum quote amount and maximum order amount parameters to filter messages. The quote screening function rejects quotes below the minimum threshold, and the order screening function rejects orders above the maximum threshold, thereby reducing message volume while preserving valid trading opportunities.
Solution Approach 2:
The patent segments the message processing into distinct stages: quote screening, market view generation, order screening, and matching. This segmentation allows the system to process only relevant messages at each stage, improving efficiency without compromising trading flexibility.
2Manufacturing precision
If dealer intervention is increased to handle small value transactions, then transaction accuracy improves, but overhead and time consumption increase
Solution Approach 1:
The system implements automated screening and matching functions that operate without dealer intervention. The quote screening function automatically filters invalid quotes, the market view generator automatically creates trading views, and the matching function automatically pairs orders with quotes, eliminating manual processing time.
Solution Approach 2:
The patent replaces manual dealer intervention with automated computer-based screening and matching systems. The electronic filtering of quotes and orders based on predefined parameters substitutes the mechanical process of manual review and decision-making.
3Quantity of substance
If the system accepts all quote amounts, then market liquidity is improved, but unnecessary message processing increases
Solution Approach 1:
The patent sets a minimum quote amount parameter that filters out trivial quotes from the processing stream. This parameter change maintains liquidity from significant quotes while eliminating the processing overhead associated with negligible quote amounts.
Data Source
AI summary
A computer trading system includes a quote screening function configured to accept quotes specifying a quote amount in a price where the quote amount is greater than a minimum quote amount to produce screen quote messages and to reject quotes specifying a quote amount less than the minimum quote amount. A market view generator generates market views from those quotes which specify an amount greater than or equal to the minimum quote amount. An order screening function only accepts orders specifying an amount less than a maximum transaction amount submitted in response to the market views to produce screened order messages. A transaction processor receives screened quote messages and screened order messages and matches appropriate messages with each other. The minimum quote amount is substantially equal to or greater than the maximum transaction amount whereby a screened order message can be matched entirely with one screened quote message.