When allocating contracts under pro-rata matching, how are the 25 contracts distributed among the orders of 20, 20, and 50 contracts respectively?

In a pro-rata matching system, contracts are allocated to orders based on their relative sizes. In this scenario, we have three different orders with sizes of 20, 20, and 50 contracts.

To understand how the allocation works, we start by calculating the total number of contracts across all orders, which is 20 + 20 + 50 = 90 contracts. Each order's share of the total is then used as a basis for determining how many of the 25 contracts available for allocation each order should receive.

The allocation is done by looking at the proportion of each order's size relative to the total:

• Order #1: 20 contracts / 90 contracts = 22.22%

• Order #2: 20 contracts / 90 contracts = 22.22%

• Order #3: 50 contracts / 90 contracts = 55.56%

Next, we take these percentages and apply them to the 25 contracts available:

• Order #1: 25 contracts * 22.22% = approximately 5.56 contracts, which we round down to 5 contracts.

• Order #2: 25 contracts * 22.22% = approximately 5.56 contracts, which