Trustless Trade Recommendation System with Client Authorization
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Solution Overview
Problem
Unauthorized trading by brokers or financial advisors is a significant issue, leading to financial losses for clients and erosion of trust, as existing methods lack transparency and accountability in trade execution.
Innovation Solution
A system and method for pushing 'trustless' trade recommendations to clients, where recommendations are not executed without explicit client approval, involving a broker device, client device, and server interconnected via a network, where the client reviews and confirms or denies trade orders, ensuring that trades are only executed with explicit client consent.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If brokers execute trades based on verbal agreements with clients, then trading speed and convenience are improved, but unauthorized trading and lack of accountability increase
Solution Approach 1:
The system requires clients to pre-register their trading preferences, risk tolerance, and investment criteria before any trade execution. This preliminary setup creates a framework that enables automated execution while maintaining authorization accuracy, resolving the contradiction between speed and reliability.
Solution Approach 2:
The system implements real-time feedback loops where trade recommendations are pushed to client devices, clients can review and approve or reject each trade, and the system provides confirmation of executed trades. This feedback mechanism ensures authorization accuracy is maintained while enabling efficient trade execution.
2Reliability
If brokers manually document due diligence for each recommendation, then accountability and transparency are improved, but time consumption and operational complexity increase
Solution Approach 1:
The system automatically generates and maintains due diligence documentation by tracking all research data, market analysis, and decision-making criteria associated with each trade recommendation. This automated self-service approach eliminates manual documentation while maintaining complete accountability records.
Solution Approach 2:
The platform acts as an intermediary between brokers and clients, automatically capturing and storing all due diligence information in a structured format. This intermediary system handles the documentation burden, providing transparent records without requiring manual effort from brokers.
3Reliability
If clients review and approve each trade recommendation, then unauthorized trading is eliminated, but trading efficiency and speed decrease
Solution Approach 1:
Clients pre-configure their trading parameters, risk preferences, and investment criteria in advance. This preliminary action enables the system to automatically filter and pre-approve trades that align with client preferences, reducing the need for manual review while maintaining authorization control.
Solution Approach 2:
The system implements a hybrid approach where only trades requiring client-specific approval are pushed for review, while trades that clearly align with pre-configured preferences can be executed automatically. This partial action approach maintains authorization control for critical decisions while preserving efficiency for routine trades.
Data Source
AI summary
This disclosure describes, in part, systems and techniques for pushing trade recommendations to a client device. A broker device may execute an instance of a broker application that receives input associated with a trade order recommendation and may generate a trade order using the input. The broker application may transmit the trade order and supporting due diligence data to the client device. The client device may receive the client's response on whether to execute the trade (approval) or not (rejection) and may transmit the client's determination to the broker application. The broker application may store the client's response and may restrict modification thereto. If the client response includes an approval, the broker application may transmit the associated trade order to an execution venue. If the client includes a rejection, the broker application may transmit the rejected trade order recommendation to a rejected queue.