In medieval Europe, merchants used short-term bills of exchange with foreigners, settling their accounts at trade fairs. Later, bank bills arose. They were based on gold or silver, with the premise that people could exchange them for coins. In , England designated gold as the official standard of value. Bills and coins circulated freely, but they could also be lost or stolen. In the 16th century, checks began to appear, and they eventually became the dominant means of value transfer for both businesses and individuals.
Transporting money or checks by ship or horse-delivered mail could take months. The invention of the telegraph enabled merchants to use Western Union for money transfers from on, greatly speeding the pace of transactions and bringing businesses into the modern era. From Gold To Governments Money began to travel faster and in large volumes.
Gold worked as a value standard because so many people accepted it; currencies, however, were another matter. Many countries countered this issue by establishing central banks intended to standardize and stabilize their currencies. The United States — whose founding fathers had mixed opinions on central banks — finally established one in , with the creation of the Federal Reserve System. Though central banking made currencies more stable, pegging them to gold made them inflexible.
During World War I, some countries temporarily abandoned the gold standard so they could print more money to finance the war.
The Great Depression saw countless runs on banks, as frightened people rushed to exchange the bills they no longer trusted for gold. As a result, Britain dropped the gold standard in , followed by the United States a couple of years later. Today, the value of a currency depends not on gold, but on the reputation and laws of the issuing country. The U. In Credit We Trust To many people, the dollar is money, but Perry Mehrling — a professor of international political economy at Boston University — says that idea is wrong. SWIFTer And Easier State-backed currencies remain the foundation of modern monetary systems, but the means of transfer have changed, becoming ever faster.
In the s, banks began using credit cards. A person no longer needed to write out a check and separately record the amount every time he or she bought groceries or went out to dinner. A decade later, banks introduced ATMs, giving people the option to deposit checks and withdraw cash on the go. The internet brought us electronic deposits and new payment systems, including PayPal and OFX renamed from OzForex , both introduced in Have we reached the limits of what money transfers can do? The New Frontier: Blockchain Not by a long shot, blockchain advocates say. Distributed ledger technology creates an indelible, unfalsifiable record of every step of a transaction.
Banks and businesses are experimenting with blockchain, and it seems a new cryptocurrency springs up every week. But Jack Vonder Heide, president of Technology Briefing Centers , a firm that advises banks and credit unions on technology trends, sees a bright future for them, especially as the sharing economy develops.
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Frequency Daily. In addition, contingency order matching can easily degrade the performance of the matching service. Sometimes, for load reasons these services must be suspended. This is a crude maneuver, and will not suffice as users expect all their orders kept active and ready to trade at various market conditions.
Future order types with more conditions and parameters will also increase the expectations on the evaluation policy. In effect, users will slowly start to expect a more refined view on Quality-of-Service as is true in other areas of Information Technology. Hence, it is desired to have best-effort processing services in certain cases, to open up for evaluation of more complex orders, but best effort services are ruled out by the deterministic requirement for the matching engine software. There is a need for a computerized automated exchange system that is able to centrally provide a very broad range of services to its users clients and which system at the same time can be developed and designed in a manner that keeps costs at an acceptable level, and which also can provide an acceptable matching of complex contingency orders without negatively affecting the matching engine of the exchange system.
It is an object of the present invention to provide a matching system operating in accordance with the deterministic matching principles required by the participants of an automated trading system.
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The system further being designed to centrally provide a very broad range of services to its users clients and which system at the same time can be developed and designed in a manner that keeps costs at an acceptable level. This object and others are obtained by the present invention as set out in the appended claims.
In an automated exchange system, the deterministic matching core unit of the exchange system is supplemented with an agent trade server designed to provide a range of additional services. The agent trade server is preferably run in accordance with a best-effort principle, thereby making it possible to design at low cost.
The agent trade server is further designed to provide users with functionality that is not necessary or too expensive to implement in the deterministic core of the matching system. When the agent trade server is run in accordance with a best-effort principle a deterministic output cannot be guaranteed.
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The agent trade server feeds the deterministic core of the matching system with order input data resulting from the input received from the users of the automated trading system. Thus, the designer of a complex trading system is given an option to provide centrally-located functionality to the users of the system without having to change the deterministic core architecture of the matching system. Since the agent trade server is working in close connection with the deterministic core of the trading system, it is preferred to physically co-locate the agent trade server computer s with the computer s hosting the core of the deterministic matching system.
The present invention will now be described in more detail byway of non-limiting examples and with reference to the accompanying drawings, in which:. In FIG. The system comprises a matching core unit 1 designed in accordance with an architecture that gives the system a completely deterministic behavior. The system also comprises a multi-protocol gateway 2 forming an interface between the core unit 1 and a number of input terminals 6. The terminals 6 are connected to the gateway 2 via lines 4.
The lines 4 are typically leased lines, but also other types of lines including an Internet connection can be used as long as the gateway is designed to handle the protocol of the used connection. The lines 4 can also be used to provide users of the system with multicast messages, e. The connection from an input terminal via a leased line connecting to the core of the automated trading system via a gateway is an example of how a conventional trading system can be designed. In addition to conventional system units, the system as depicted in FIG.
The unit provides additional system services and uses an architecture that does not ensure deterministic matching. The unit 3 continuously receives information relating to the matching taking place in the core unit. Each sub-unit is designed to provide a particular type of additional service. Thus, the sub-unit 3 a is a computer running software specialized in finding solutions to complex combination orders. The sub-unit 3 b is termed an agent trade server of a first type.
The unit can, for example, be designed with user-configurable agents specialized software acting on behalf of a user controlled by a master dispatcher that utilize multi-threading or similar non-guaranteed resource sharing under the operating system of the server. The users are able to and should reconfigure their agents, i. The sub-unit 3 c is an agent trade server of a second type, with user-programmable agents for example executing under resource management or similar sharing mechanism.
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Further, the sub-unit 3 c is preferably provided with an extensive shielding mechanism in-between individual agents, so that one individual faulty programmed or resource-demanding agent cannot affect the others in an uncontrolled way. The unit 3 is connected to input terminals 8 , which may be, but do not have to be, the same as the input terminals 6 via external communication lines 5 , to a communication interface 9 , typically via Internet links for the interactive sessions and the subscriptions of various kinds status updates etc.
This is in accordance with one preferred embodiment. In other preferred embodiments the unit 3 a may equally well be connected also to the interface 9. The flowcharts in FIG. In an in-use system there may be several buffers, logging facilities and checkpoints located on the path from the gateway 2 to the matching sub-system, to make the core of the matching system robust and deterministic, but that is not the object of present invention and will therefore not be discussed further herein.
If there is a match between the orders and , the matching unit will generate a broadcast message informing the participants involved in the trade, and, depending on market transparency settings, also generate a message used for informing other interested parties to limited or full extent via a dissemination service unit that broadcasts a message In the example depicted in FIG.
Further, it is assumed that the order-matching unit cannot immediately and deterministically allocate deals from these orders A typical scenario is that the orderbook is in the mode of a combinatorial auction procedure. Hence, a number of orders are temporarily blocked under certain conditions. The orders are then swiftly given to a core services extension in the best-effort sub-system 3 , i. If the matcher can accept the proposed allocation, it executes accordingly and disseminates in the results of the trade in a conventional way as previously described with a message The ATS corresponds to the sub-unit 3 b as described above.
It is preferred that the means for communication is not part of the core, since that could compromise the paradigm stance. The agent of the sub-unit 3 b is continuously fed the same market data from the deterministic core unit 1 exactly as the participant would have been, and can also be, fed through external systems via messages The agent makes a decision based on its configuration parameters and the market data it has received and may put an order to the deterministic core through proper interfaces such as a gateway or connector facility, thus routed into the same stream as all other arriving orders The matcher unit evaluates everything at hand and produces deals and market information messages , as described above in conjunction with FIGS.
The behavior of the agent, as seen from the perspective of the core, is the same as that of the sub-unit 3 b described in conjunction with FIG. The difference being that the participant can upload executable code or scripts to a predefined agent trade server computer in the best-effort unit 3 via orders It is preferred that the means for communication of the orders is not part of the core, since that could compromise the paradigm stance.
While the inner workings of the sub-unit 3 c are different to the sub-unit 3 b, they preferably have identical interfaces to the core unit 1. The information messages , , and therefore correspond to the corresponding information flows depicted in FIG. Finally, FIG. Thus, building upon the robustness of the deterministic exchange system platform, a complementary subsystem operating fully under the best-effort principle is formed, increasing the overall system performance with respect to bandwidth management, processing resource management, fault tolerance, and exception handling.
The overall system formed in this manner will have a continued complete tractability in the current services. The hybrid system where the new, optional best-effort services are contained in a separate subsystem, which can be termed the best-effort appurtenance, will complement in a conventional deterministic exchange system. A cardinal use case for the new subsystem is when the user uploads a latent order combined with a trigger configuration, combined into a so-called agent instruction, to the ATS. The ATS, operating under the best-effort principle, communicates with the exchange system platform using one of the already available protocols.
The ATS computer will typically be placed physically close to the computer hosting the traditional central software of the exchange system the core , and between the ATS and the core will be a high-speed, local connection. The ATS, upon receiving the agent instruction, will create a new thread to handle this new request, or revise a previously spawned thread or process.
A precondition for the automatic activation of a latent order in the ATS is a Boolean operation on a set of scenario triggers. Inspirational generic scenarios can be proposed by the marketplace operator, and then adjusted by each trader or investor. The scenarios could be saved in personalized galleries, and optionally calibrated for each individual order. The Agent in the ATS will continuously evaluate the triggers in its instruction against real-time market information received from the deterministic core unit. The drawback for the trader with communicating trade intention early, can be more than offset by the inherent premium in the reliable, cheap, high-speed connection between the core and the ATS.
The proximity and direct connection is effectively feeding the ATS with market data much faster than anyone else, thus putting the agents in the ATS at an advantage in certain cases. This maybe inciting enough to stimulate an early submission of orders via the ATS. While the present invention has been described with respect to particular embodiments, those skilled in the art will recognize that the present invention is not limited to these specific exemplary embodiments.
Different formats, embodiments, and adaptations besides those shown and described as well as many variations, modifications, and equivalent arrangements may also be used to implement the invention. Therefore, while the present invention has been described in relation to its preferred embodiments, it is to be understood that this disclosure is only illustrative and exemplary of the present invention. Accordingly, it is intended that the invention be limited only by the scope of the claims appended hereto.
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A computerized automated trading system for trading of financial instruments between traders connected to the system via remote terminals and a data network, comprising: a deterministic central matching unit for providing deterministic matching orders entered into the system by the traders in which outputs from the deterministic central matching unit depend only on input data received by the deterministic central matching unit, and.
A system according to claim 1 , wherein the supplemental trading server is physically co-located with the server hosting the central matching unit.
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A system according to claim 1 , wherein the supplemental trading server is configured to calculate solutions to combination orders.