Overview

ProphetX operates a fully disintermediated, direct-access electronic trading system. All Market Participants trade directly on the platform without the use of intermediary brokers or Futures Commission Merchants (FCMs). The trading system relies on a fully collateralized model, requiring participants to fund the maximum potential loss of any position prior to execution.

Trading Infrastructure

The core of ProphetX's trading infrastructure consists of two complementary systems: an anonymous Central Limit Order Book (CLOB) and a Request for Quote (RFQ) system.

Central Limit Order Book (CLOB). The CLOB is an internally developed proprietary matching engine hosted on Amazon Web Services (AWS). It continuously manages order entry, order book depth, and trade processing during open market sessions.

Request for Quote (RFQ). Participants may use the RFQ system to solicit quotes for specific contract sizes. Quotes are initially visible only to the requesting participant. Upon confirmation, the platform sequentially enters the orders for the quoter and the requester into the CLOB with time priority.

Order Types

Limit Orders. ProphetX currently supports limit orders, which allow participants to specify the exact price and quantity at which they are willing to trade. Limit orders execute on an "or better" basis. A buy order priced above the best available offer will execute at the better offer prices up to the stated limit price. A sell order priced below the best available bid will execute at the better bid prices down to the stated limit price.

Market Orders. A market order is an instruction to buy or sell a specified quantity at the best available price in the order book, executing immediately against resting liquidity without requiring the participant to specify a price. Market orders prioritize speed and certainty of execution over price. They fill against available resting orders until the full quantity is filled or available liquidity is exhausted.

Trade Matching Algorithm

The ProphetX matching engine pairs incoming orders with existing resting liquidity using a strict price-time priority algorithm.

Price Priority. The engine first identifies opposing orders that meet or offer a better price than the incoming order. Orders resting at more favorable prices are always executed before orders at less favorable prices.

Time Priority (FIFO). When multiple resting orders share the same best price, the algorithm applies a first-in, first-out rule, granting execution priority to the order that was submitted earliest.

Matching continues until the incoming order is completely filled or no further eligible opposing orders remain. Any unfilled portion of an incoming order rests on the order book and remains visible to the entire market.

Trade Execution Mechanisms

Execution on the ProphetX platform is governed by a sequence of pre-trade risk controls, fund sequestration, and novation.

Pre-Trade Risk Checks. Before any order may enter the matching engine, the system performs a buying-power check. If an order exceeds the available funds in a participant's account, the system applies a hard block and the order is automatically rejected.

Sequestration and Novation. When the matching engine pairs two orders, the system immediately moves the required funds from both the buyer's and the seller's accounts into a segregated collateral fund. At the moment of execution, the trade is novated — the ProphetX Derivatives Clearing Organization (DCO) is instantly substituted as the central counterparty, acting as the buyer to every seller and the seller to every buyer.

Occurrence and Settlement. ProphetX lists occurrence-based binary option contracts, such as contracts based on the outcome of a sporting event. Once the specified event transpires and the result is officially determined, the system automatically cancels any remaining open orders in the affected market and uses the segregated collateral fund to settle executed trades. Payouts are credited to winning positions, and collateral posted by losing positions is forfeited accordingly.