Systems and methods for implementing trading and global matching based on request and offer of liquidity

• US 10,229,457 B2
• Filed: 05/11/2015
• Issued: 03/12/2019
• Est. Priority Date: 05/11/2015
• Status: Active Grant

• Current Assignee: GFI Group Incorporated (BGC Group, Inc.)
• Original Assignee: GFI Group Incorporated (BGC Group, Inc.)
• Inventors: Cicero, Francesco, Prest, Simon
• Primary Examiner(s): Poinvil, Frantzy
• Application Number:
  US14/708,451
• Publication Number:
  US 20160335719A1
• Time in Patent Office: 1,401 Days
• Field of Search: 705 3- 44
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

Apparatus for stimulating trading in a limited-liquidity financial instrument are provided. One the method may include receiving a trade of liquidity for the limited-liquidity financial instrument. The receiving may include receiving a first order. The first order may correspond to a price and volume associated with a pre-determined bid-offer spread. The order may be executable only in conjunction with a counterorder that trades with the first order and includes a commitment to make a two-way market in the financial instrument at the predetermined bid-offer spread. In certain embodiments, when the first order is received from a first entity and the counterorder is received from a second entity, the method may also include receiving a bid price and an offer price from a second entity. The method may also include receiving an instruction from the first entity to select one of the bid and the offer and to execute a trade therewith. The execution of the trade may be for a size not less than the pre-determined size. If the system fails to receive a selection from the first entity within a pre-determined period of time, the method may further include executing a trade based on a pre-determined election by the second entity of a default trade direction.

Claims

1. A computer-implemented method for stimulating trading in a limited-liquidity financial instrument over a computer network having a server system and at least first and second computers, the method comprising:

receiving at said server a trade of liquidity for the limited-liquidity financial instrument, said receiving comprising;

receiving a first order from said computers, said first order corresponding to a price and volume associated with a pre-determined bid-offer spread, said order being executable only in conjunction with a counterorder that trades with the first order and includes a commitment to make a two-way market in the financial instrument at the pre-determined bid-offer spread and initiating a timer to keep track of time elapsed since occurrence of a trade of the financial instrument to a pre-determined time requirement to make a market; and

;

comparing at said server a time elapsed since occurrence of a trade of the financial instrument to a predetermined time requirement to make a market; and

if results of the comparison indicate that the time elapsed has exceeded the predetermined time requirement, then executing a process to (a) initiate a process to generate electronic commands to cause to submit a trade on a default market based on existing market prices, (b) to initiate a penalty phase to generate electronic commands to cause to impose a penalty on a user that has made the commitment to make a two-way market in the financial instrument at the predetermined bid-offer spread but that has failed to execute a trade on the commitment, and (c) execute a process to cause to generate electronic commands to impose restriction of participation rights on the user that has made the commitment but failed on the commitment.

2. The method of claim 1 further comprising:

analyzing the financial instrument;

categorizing the financial instrument as a limited-liquidity financial instrument, said categorization based, at least in part, on a determination that a liquid market that meets a predetermined liquidity threshold does not exist for the financial instrument; and

stimulating an increase in trading volume for the limited-liquidity financial instrument, the stimulating comprising the receiving a trade of liquidity.

3. The method of claim 1 further comprising flagging the counterorder if the counterorder fails to set the bid-offer spread.

4. The method of claim 3 further comprising receiving a time limit requirement, said time limit requirement corresponding to the amount of time for which the counterorder is required to set the bid-offer spread.

5. The method of claim 1 wherein, when the first order is received from a first entity and the counterorder is received from a second entity, the method further comprises:

receiving a bid price and an offer price from the second entity; and

obligating the first entity to select one of the bid and the offer and to execute a trade therewith, the execution for a size not less than the pre-determined size.

6. The method of claim 5 wherein the bid price and the offer price form the spread, and the bid price or the offer price is within a predefined price window of a mid-market level.

7. A computer-implemented method for stimulating trading in a limited-liquidity financial instrument over a computer network having a server system and at least first and second computers, the method comprising:

receiving at said server, a trade of liquidity for the limited-liquidity financial instrument, said receiving comprising;

receiving from said first computer, a first order, said first order corresponding to a price and volume associated with a pre-determined bid-offer spread, said order being executable only in conjunction with a counterorder that trades with the first order and includes a commitment to make a two-way market in the financial instrument at the predetermined bid-offer spread wherein,

when the first order is received from a first entity and the counterorder is received from a second entity at said second computer, the method further comprises;

receiving a bid price and an offer price from the second entity; and

receiving an instruction from the first entity to select one of the bid and the offer and to execute a trade therewith, the execution for a size not less than the pre-determined size;

wherein, if the system fails to receive from a selection from the first entity within a predetermined period of time, the method further comprises (a) executing a trade based on a predetermined election by the second entity of a default trade direction, (b) initiating a penalty phase to generate electronic commands to cause to impose a penalty on a user associated with the commitment, and (c) executing a process to cause to generate electronic commands to impose restriction of participation rights on the user associated with the commitment.

8. The method of claim 7 further comprising:

analyzing the financial instrument;

categorizing the financial instrument as a limited-liquidity financial instrument, said categorization based, at least in part, on a determination that a liquid market that meets a predetermined liquidity threshold does not exist for the financial instrument; and

stimulating an increase in trading volume for the limited-liquidity financial instrument, the stimulating comprising the receiving a trade of liquidity.

9. The method of claim 7 further comprising flagging the counterorder if the counterorder fails to set the bid-offer spread within a pre-determined time limit requirement.

10. The method of claim 9 further comprising receiving the time limit requirement, said time limit requirement corresponding to the amount of time for which the counterorder is required to set the bid-offer spread.

11. The method of claim 7 wherein, when the first order is received from a first entity and the counterorder is received from a second entity, the method further comprises:

receiving a bid price and an offer price from the second entity; and

receiving an instruction from the first entity to select one of the bid and the offer and to execute a trade therewith, the execution for a size not less than the pre-determined size.

12. The method of claim 11 wherein the bid price and the offer price form the spread, and the bid price or the offer price is within a predefined price window of a mid-market level.