Wash Trade

Background

This project helps firms by giving them a way to prevent trading with themselves.  When ‘wash trades’ occur today, it can result in busts that have to be performed by client’s Help Desk and can also cause potential regulatory issues for the firms.

Goal

The goal of this project is to adapt existing client Wash Trade Prevention (WTP) functionality for client’s usage.  The objective of this project is to enhance the system to allow client’s firms to have a default ‘wash trade prevention’ behavior applied to all of their quotes and orders.  Firm has the option to choose “cancel incoming orders,” “cancel resting orders,” or “cancel both incoming and resting orders."

Solution

The strategy for this project is to enhance the client’s system to allow a firm to have its orders and quotes subject to a default wash trade prevention strategy.  CTI implemented WTP strategy for some other Stock Exchanges in early 2012.  This project is to apply this strategy to client’s system with design consideration to have it potentially applied to all the exchanges under client’s holding.  Cross-exchange common logic is implemented in generic order booking/trading layer; exchange specific logic is implemented in exchange level components.  This design is open for extension, but close for modification.

Impact

Client’s trading firms will be more efficiently sending orders and quotes without mistakenly trade with their own quotes or earlier sending orders.  Client’s help desk staff will be released from the burden of manual busting WTP incurred trades.  Client’s trading firms will not be flagged by SEC or INSFRA on WTP trades occurred within the firm.