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I'm working with a startup that is building an exchange platform in which a platform-wide currency is exchanged for commodities which are discrete. For the sake of the question, let's say that users are buying and selling limited-edition pogs (though we don't have to account for the condition of the items). This is similar to buying and selling stocks in that the users make bids for acceptable prices at which they are willing to buy or sell a number of pogs.

Here's the problem we're encountering: The founders envision a user (let's say Bob) who may only have $5.00 to his name, may want to put in an order for pog A at $5.00 and pog B at $5.00 (and the current best sell prices for pogs A and B are around $6.00). In the stock market exchanges I'm familiar with, if you have $5.00 and you put in a bid for $5.00 of stock, your $5.00 are now tied up; you can't put in an order for another stock for $5.00 also. For our exchange, we envision an approach where if Bob wants to place orders for pogs A and B at $5.00 each, and then the best sell price for both pogs moves to $5.00, the oldest order is filled, and the other order becomes inactive. Before we proceed with development, we want to research if there is any other exchange that offer this same ability, as we are concerned that there may be technical limitations in this approach that have prevented it from being implemented thus far.

So basically, are there any exchanges in which a user can place bids for multiple commodities that would exceed his/her funds if all orders were filled, and in which the exchange will prevent orders that would exceed the user's balance from being filled?

closed as off-topic by Dheer, Victor, JoeTaxpayer Aug 4 '15 at 13:42

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Margin trades let you post a margin of a certain proportion of the value of the trade as collateral against the price of a trade and pay off the difference between the current price and the price that you bought at. Any losses incurred are taken from the margin so the margin has to be maintained as prices change. In practice this means that when the price moves significantly from the buying price a "margin call" is triggered and the buyer has to increase their posted margin. The vast majority of the foreign exchange trades done every day are margin trades as (effectively) are all spread bets. Margins get reset overnight whether or not a call has occurred.

  • Thank you for the response. I'm not too familiar with margins, but they appear to be a form of loan in which the purchaser ends up buying stock on credit. I may have been unclear in the question, but I'm essentially wondering if any exchanges don't lock funds that are used in bids, so that a user can bid more than their funds but only those bids that can be satisfied by the user's balance will be filled (so remaining bids will not be filled if the user's available balance drops to 0) – Hart Simha Jan 16 '15 at 10:19
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Yes, orders like this are very possible. There are nearly endless possibilities for structuring a trade. It all comes down to whether you have the money to make the trade at the find you find a counterparty. If you don't, the order is cancelled.

Trades like this happen all day long at Goldman, BAML, Merril, UBS, etc. And on eBay.

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