Santa Fe Double Auction Tournament --- The Sequel

What is a Double Auction?


A double auction is a market place for buyers and sellers to trade a homogeneous commodity in which buyers and sellers can "simultaneously" call out bids (offers to buy) and asks (offers to sell) and the number of the units of the commodity that they wish to buy or sell. Real world examples of double auction markets include the Chicago Board of Trade and the New York Mercantile Exchange where the double auction is operationalized as open outcry, i.e. where bids, asks and desired quantities are communicated via a combination of hand signals and shouting in sometimes frenetic "trading pits". The traditional physical trading pit is rapidly getting automated out of existence, being replaced by computerized trading pits. A recent New York Times article foretells the demise of the open outcry trading pits at the Chicago Mercantile Exchange. Over time, increasing number of markets are moving to fully electronic trading platforms. Note that electronic trading should be distinguished from program trading. In the latter, computer programs (instead of humans) carry out a significant share of trades in the market. Generally electronic trading is a prerequisite for program trading. In the markets of the future, the markets will be both electronic (i.e. trades can be made remotely, such as over the web), and will involve significant amounts of program trading (i.e. many other traders in the market will be computer programs, not human beings). The Santa Fe Double Auction tournanment implements both electronic trading and program trading.

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