The marketing speaks of "portfolio" matching" abilities. With block matches there is a risk of getting filled on one side of the portfolio. So a feature that allows orders to be filled only if both sides of the list are roughly equally filled would be what is expected.

But there is no mention of how this happens, and how this will be specified. Is this is feature slated for later intro, so that at the outset it is a single stock block venue, and you'll roll out the portfolio features later?

Or is it just that instead of sending in a list one by one, we can send the entire list in one (perhaps FIX) message, but there is no support for mitigating the risk of one-sided fills?

by Trader on January 10, 2008 11:47 AM

A MatchPoint portfolio is a separate and distinct group of linked orders. These portfolios are critical to MatchPoint's effectiveness. Enabling multiple portfolios to interact between diverse market participants is no small feat. But yes, MatchPoint can not only do it, it can do it fast, fairly and flexibly.

Since MatchPoint is completely non-displayed, no participant knows going into a matching session whether or not an execution will occur. In order to enable portfolios (and single orders, for that matter) to have some control over their executions within a matching session, MatchPoint utilizes MatchPoint Net Cash Constraints.

Net Cash Constraints are an effective cash and risk management tool for managing order executions within a portfolio. Net Cash Constraints limit how much a portfolio may raise or spend in a particular matching session. This feature is optional on a portfolio-by-portfolio basis.

Cash Management- Users whose portfolio value is greater than their available capital can use net cash constraints to control how much they raise/spend while maximizing their matching opportunities. Users may also use this feature to fund purchases with their sales.

Risk Management- Users whose portfolios are sensitive to overexposure to a falling or rising market can use net cash constraints to insure that their purchases stay within a dollar range of their sales (or vice versa).

by Jim Ross on January 24, 2008 10:16 AM