Innovative order types as success factors in stock exchange competition

Through the worldwide integration of the financial markets, operators of the particular stock exchanges face an increasing competition. One—if not the most important—alternative to assure their position during this competition is the functional expansion and refinement of their trading rules (market model). However, the design of a market model is a challenging task, due to complex interdependences of the different parts of the trading rules (structural parameters). Therefore a market model cannot be planned at the drawing table and directly afterwards be built up like a house. In order to avoid bad investments, it has to be analyzed carefully, if the new designed market model possesses the required characteristics and produces the desired market outcome. In order to work out this task a prototype implementation of the market model seems to be indispensable, since such a prototype allows for testing the model by game-theoretic experiments and by simulations. In this article, we discuss the benefits, which customers obtain from using the relative or the bracket order as two examples of a functional expansion of a market model. We further augmented the market engineering tool meet2trade to support this new, innovative order types.