Design Stock Brokerage System
Design an Online Stock Exchange system that allows users to place buy/sell orders, match trades, and track stock prices in real-time, using object-oriented design.
An Online Stock Exchange is a digital platform where investors can trade stocks and other financial instruments electronically. It serves as a marketplace that brings together buyers and sellers, facilitates order matching, and ensures smooth execution of trades in real time.
Modern stock exchanges also provide:
- Live market data and stock price updates
- Historical trade information
- Tools for portfolio and order management
- Support for various types of orders (e.g., market, limit)
In this chapter, we will explore the low-level design of an online stock exchange system in detail.
Lets start by clarifying the requirements:
1. Clarifying Requirements
Before starting the design, it's important to ask thoughtful questions to uncover hidden assumptions and better define the scope of the system.
Here is an example of how a conversation between the candidate and the interviewer might unfold:
Candidate: What types of orders should the system support? Just basic market and limit orders, or more complex types like stop-loss or fill-or-kill?
Interviewer: For this design, let's stick to Market and Limit orders for both buying and selling.
Candidate: Should the system handle user accounts, including cash balances and stock portfolios?
Interviewer: Yes, each user must have an account that tracks their cash balance and the quantity of each stock they own. The system must ensure that a user has sufficient funds to buy or enough stock to sell.
Candidate: Should we support multiple stocks being traded simultaneously, or focus on a single stock for simplicity?
Interviewer: Multiple stocks should be supported.
Candidate: How should the order matching engine work? Should it follow a price-time priority (first come, first served at the same price), or is simple price priority sufficient?
Interviewer: Let's keep the matching logic simple. The engine should match the highest bid (buy order) with the lowest ask (sell order) as long as the bid is greater than or equal to the ask. We can ignore the time priority aspect for now.
Candidate: Do we need to notify users of events like when a trade executes or when a stock's price changes?
Interviewer: A user should be notified about status changes to their own orders (e.g., OPEN -> FILLED). It would also be great if users could "subscribe" to specific stocks and get notified when their prices change.
After gathering the details, we can summarize the key system requirements.
1.1 Functional Requirements
- Each user must have an account with a cash balance and a portfolio of owned stocks.
- Support trading of multiple stock symbols
- Allow users to place limit and market orders (buy or sell)
- Allow users to cancel pending (unmatched) orders
- Users should be notified of status updates for their orders.
- Users should be able to subscribe to stock price updates and receive notifications when the price changes.
- Before placing an order, the system must validate it (e.g., check for sufficient funds for a buy order or sufficient stock quantity for a sell order).
1.2 Non-Functional Requirements
- Concurrency: The system must be thread-safe to handle concurrent requests from multiple users placing orders simultaneously.
- Modularity: The system should be designed using object-oriented principles, with clear separation of concerns between components like accounts, orders, and the matching engine.
- Extensibility: The design should be modular and easy to extend. For instance, adding new order types (e.g., Stop-Loss) or different notification channels (e.g., SMS, Email) should not require major refactoring.
- Simplicity: The system should provide a simple, high-level interface for clients to perform common actions like placing an order, without exposing the underlying complexity of the matching engine.