Hybrid trading system for concurrently trading securities or derivatives through both electronic and open-outcry trading mechanisms
First Claim
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1. A method of trading derivatives in a hybrid exchange system comprising:
- collecting orders, via a communication network and order routing system, for derivatives and placing them in an electronic book database;
identifying at an electronic trade engine a new quote from a first in-crowd market participant, wherein one of a bid or an offer price in the new quote matches a respective price in an order in the electronic book database from a public customer;
removing at least a portion of the order in the electronic book database, delaying automatic execution of the new quote and the order, and starting a timer;
reporting, via the communication network and an electronic reporting system, a market quote indicative of execution of the at least a portion of the order while delaying automatic execution;
receiving at the electronic trade engine a second quote from a second in-crowd market participant after receiving the new quote from the first in-crowd market participant and before an expiration of the timer, wherein the second quote matches the respective price of the public customer order in the electronic book database; and
allocating the order between the first and second in-crowd market participants at the electronic trade engine, wherein the order is not executed until expiration of the timer.
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Abstract
A system and method of allocating orders in an exchange configured for trading by a combination of electronic and open-outcry trading mechanisms is provided. One method includes permitting multiple quotes to be disseminated to the market, but limiting market making to only those entities having a physical presence on the floor of the exchange. Methods of enhancing the hybrid electronic and open-outcry exchange also include automatically eliminating crossed quotes and locked quotes while permitting certain orders to trade against locked quotes.
184 Citations
6 Claims
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1. A method of trading derivatives in a hybrid exchange system comprising:
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collecting orders, via a communication network and order routing system, for derivatives and placing them in an electronic book database; identifying at an electronic trade engine a new quote from a first in-crowd market participant, wherein one of a bid or an offer price in the new quote matches a respective price in an order in the electronic book database from a public customer; removing at least a portion of the order in the electronic book database, delaying automatic execution of the new quote and the order, and starting a timer; reporting, via the communication network and an electronic reporting system, a market quote indicative of execution of the at least a portion of the order while delaying automatic execution; receiving at the electronic trade engine a second quote from a second in-crowd market participant after receiving the new quote from the first in-crowd market participant and before an expiration of the timer, wherein the second quote matches the respective price of the public customer order in the electronic book database; and allocating the order between the first and second in-crowd market participants at the electronic trade engine, wherein the order is not executed until expiration of the timer. - View Dependent Claims (2, 3, 4, 5, 6)
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Specification