Method and apparatus for a fair exchange

• US 20040068461A1
• Filed: 10/02/2002
• Published: 04/08/2004
• Est. Priority Date: 10/02/2002
• Status: Active Grant

• Current Assignee: Trading Technologies International, Inc.
• Original Assignee: Trading Technologies International, Inc.
• Inventors: Schluetter, Jens-Uwe
• Granted Patent: US 7,752,115 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 30/0601 Electronic shopping [e-shopping]
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A fair exchange is disclosed to reduce potential inequities in an electronic trading environment. Market data is sent from a host system to client devices through one or more synchronized local communication servers such that the data can be displayed simultaneously or nearly simultaneously at each client device. Market data sent to client devices might include price information. Likewise, a host system may transaction data sent from client devices via the local communication servers. The ordering of transaction data is based, at least in part, on when the local communication servers received the transaction data from the client devices. Transaction data sent to a host system might include order information.

Claims

1. A method of equalizing a time at which client devices receive market data from a host exchange through a plurality of network devices, the method comprising the steps of:

sending market data from the host exchange to the plurality of network devices over one or more networks, wherein one or more client devices are coupled to each of the plurality of network devices; and

releasing the market data from the plurality of network devices to associated client devices at a pre-determined time, wherein the pre-determined time is computed such that arrival times of the market data at each client device are equalized.

2. The method of claim 1 further comprising the steps of:

determining a time delay associated with a longest travel time from a plurality of travel times found by measuring, for each network device, a travel time for data to travel over a network between the host exchange and each network device; and

computing the pre-determined time by summing the time delay to the time when data was sent from the host exchange.

3. The method of claim 1 further comprising the steps of:

receiving the market data at each of the plurality of network devices;

comparing, at each of the plurality of network devices, the pre-determined time to a synchronized time associated with a reference time source; and

releasing the market data to the client devices when the synchronized time is at least equal to the pre-determined time.

4. The method of claim 1 wherein the plurality of network devices are communication servers, where each of the communication servers has access to a synchronized clock.

5. The method of claim 1 wherein the market data comprises price information for a particular tradeable object.

6. The method of claim 1 wherein each of the plurality of network devices is geographically positioned near associated client devices.

7. A method of prioritizing transaction messages received at a host exchange, each of the transaction messages originating from a client device and being sent to the host exchange from a network device coupled to the client device, the method comprising the steps of:

receiving a first transaction message from a first network device, the first transaction message comprising data associated with a first time at which the first transaction message was received at the first network device from a first client;

receiving a second transaction message from a second network device, the second transaction message comprising data associated with a second time at which the second transaction message was received at the second network device from a second client; and

prioritizing the first and second transaction messages based on the first and second time.

8. The method of claim 7 further comprising the step of forwarding the prioritized first and second transaction messages to a matching engine.

9. The method of claim 7 wherein the first and second time are determined based on reference to a first and second clock, respectively.

10. The method of claim 9 wherein the first and second clocks are synchronized.

11. The method of claim 7 wherein the step of prioritizing the first and second transaction messages comprises placing the first and second transaction messages into a queue based on the first and second times.

12. The method of claim 11 further comprising the step of dequeueing the first transaction message when a time is equal to or after the first time plus a time delay value and dequeueing the second transaction message when the time is at least equal to or after the second time plus the time delay value.

13. The method of claim 12 wherein the time delay value comprises a time associated with a longest travel time determined from a plurality of travel times found by measuring, for each of a plurality of network devices, a time associated with a travel time for data to travel over a network between each network device and the host exchange.

14. The method of claim 7 wherein the first and second transaction messages are associated with orders to buy or sell a tradeable object.

15. A method of prioritizing transaction messages that are sent to a host exchange, the method comprising the steps of:

sending a first transaction message from a first client device associated with a first network device, and determining a first time at which the first network device received the first transaction message;

sending a second transaction message from a second client device associated with a second network device, and determining a second time at which the second network device received the second transaction message; and

using the first and second times to prioritize the first and second transaction messages.

16. The method of claim 15 wherein the first network device is geographically positioned near the first client device and wherein the second network device is geographically positioned near the second device.

17. The method of claim 15 further comprising the steps of:

adding data associated with the first time to the first transaction message;

adding data associated with the second time to the second transaction message; and

sending the first and second transaction messages with the additional data to the host exchange.

21. The system of claim 16 wherein each of the plurality of network devices comprise communication servers.

18. A system for reducing potential inequities when trading over one or more networks, the system comprising:

a host exchange;

a plurality of network devices coupled to the host exchange; and

at least one client device coupled to each of the plurality of network devices,

wherein each of the plurality of network devices references a synchronized clock to determine a plurality of times at which transaction messages arrived at the plurality of network devices, and wherein the transaction messages sent from the client devices are prioritized based on the plurality of times.

19. The system of claim 18 wherein the host exchange comprises a matching engine for matching orders sent from the client devices.

20. The system of claim 19 wherein the matching engine matches orders using a first in, first out matching algorithm.

22. The system of claim 18 wherein the each of the plurality of network devices is geographically positioned near the first client device and wherein the second network device is geographically positioned near the second device

23. A system for reducing potential inequities when trading over one or more networks, the system comprising:

a first interface device for receiving a first transaction message from a client device coupled to a first network device, where the first transaction message is marked with a first time at the first network device;

a second interface device for receiving a second transaction message from a client device coupled to a second network device, where the second transaction message is marked with a second time at the second network device; and

a processor for prioritizing the first and second transaction messages based on the first and second time.

24. The system of claim 23 wherein the first interface device and the second interface device are central communication servers.

25. The system of claim 23 wherein the first interface device and the second interface device comprise the same central communication server.

26. The system of claim 23 further comprising a memory device for storing the first transaction message and associated first time and for storing the second transaction message and associated second time.

27. The system of claim 26 further comprising:

a matching engine; and

a processor for forwarding from the memory device to the matching engine the first transaction message when a time is at least equal to or after the first time plus a time delay value and the second transaction message when the time is at least greater than the second time plus the time delay value.

28. The system of claim 27 wherein the time delay value comprises a time associated with a longest travel time determined from a plurality of travel times found by measuring, for each of a plurality of network devices, a time associated with a travel time for data to travel over a network between each network device and the host exchange.

29. The system of claim 23 wherein the first interface device and the second interface device access one or more clocks that are synchronized in time with the first and second network devices.

30. The system of claim 23 wherein the first interface device, the second interface device, and the processor are located at an electronic exchange.

31. The system of claim 23 further comprising a matching engine for matching orders based on priority.