Automated auction protocol processor

• US 20040044610A1
• Filed: 03/07/2003
• Published: 03/04/2004
• Est. Priority Date: 12/13/1996
• Status: Abandoned Application

• Current Assignee: Cantor Fitzgerald, L.P., CFPH LLC (Cantor Fitzgerald, L.P.)
• Original Assignee: Cantor Fitzgerald, L.P.
• Inventors: Lutnick, Howard W., Paul, Bijoy, Fraser, Stuart A.
• Application Number:
  US10/382,527
• Publication Number:
  US 20040044610A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A data processing system for implementing transaction management of auction-based trading for specialized items such as fixed income instruments. The data processing system provides a highly structured trading protocol implemented through a sequence of trading paradigms. The system employs a distributed computer processing network linking together a plurality of commonly programmed controlled workstations. The protocol and its programmed controlling logic enhances trading efficiency, rewards market makers and fairly distributes market opportunity to system users.

Claims

25. (New) A method implemented by a programmed computer for trading a volume of an item between participants using workstations coupled over a computer network, the method comprising:

receiving a first bid or offer from a first participant for a first volume of the item;

distributing to the workstations bid or offer information corresponding to the first bid or offer;

receiving a second bid or offer for a second volume of the select item;

receiving a hit or lift entered by a second participant to sell or buy all volume of the item at a desired price;

determining that the hit or lift was entered within a given time period from entry of the second bid or offer, and responsively enabling the second participant to elect to avoid selling or buying at least a portion of the second volume of the item.

26. (New) The method of claim 25, further comprising executing a trade of the item in a volume excluding that portion of the second volume of the item that the second participant elects to avoid.

27. (New) The method of claim 25, wherein the second participant elects to avoid the entire second volume of the item.

28. (New) The method of claim 25, wherein the second participant elects to avoid none of the second volume of the item.

29. (New) The method of claim 25, wherein the second participant elects to avoid at least a portion of the second volume, said method further comprising:

enabling other participants to hit or lift that portion of the second volume of the item that the second participant elected to avoid, at a price defined by said desired price.

30. (New) A method implemented by a programmed computer for trading a volume of an item between participants using workstations coupled over a computer network, the method comprising:

distributing to the workstations a bid or offer for the item at a selected price and volume entered by a first participant;

receiving a hit or lift entered by a second participant in response to the bid or offer to trade a volume of the item; and

determining that the second participant may not have intended to hit or lift at least a portion of the volume of the item that was hit or lifted, and responsively providing the second participant an opportunity to refuse to trade the portion of the volume of the item that the second participant did not intend to hit or lift.

31. (New) The method of claim 30, wherein said determining step comprises detecting that the second participant hit or lifted an unaged bid or offer, and wherein the portion of the volume of item that the participant may not have intended to hit or lift includes the volume of the item associated with the unaged bid or offer.

32. (New) The method of claim 31, wherein a bid or offer is unaged if it was entered within a given time period prior to entry of the hit or lift.

33. (New) The method of claim 30, wherein the second participant is given an opportunity to refuse to sell or buy all of the portion of the volume of the item that the second participant did not intend to hit or lift.

34. (New) A method implemented by a programmed computer for trading a volume of an item between participants using workstations coupled over a computer network, said method comprising:

distributing to the workstations information reflecting pending market conditions, said information including bids or offers for the item at select prices and volumes;

receiving a hit or lift trade command entered at one of the workstations by a participant responding to the market conditions willing to trade a desired volume of the item at a desired price;

determining whether a hit or lifted bid or offer recently changed prior to receipt of the trade command and, if so, responsively enabling the participant to refuse the sale or purchase of at least a portion of the volume of the item associated with the recently changed bid or offer.

35. (New) The method of claim 34, wherein the determining step determines that the recently changed bid or offer changed the total volume of the item as reflected by the pending market conditions.

36. (New) The method of claim 34, wherein the determining step comprises detecting that a bid or offer for the item was entered within a given time period prior to the hit or lift.

37. (New) The method of claim 34, wherein the participant is enabled to refuse to sell or buy all of the volume of the item associated with the recently changed bid or offer.

38. (New) The method of claim 34, wherein if a hit or lifted bid or offer did not recently change prior to receipt of the trade command, automatically executing a trade of the item at the desired price in the volume associated with the unchanged bid or offer.

39. (New) A method implemented by a programmed computer for trading a volume of an item between participants using workstations coupled over a computer network, said method comprising:

distributing to the workstations information reflecting pending market conditions with respect to the item, the information including bid/offer price and volume information;

receiving a hit or lift entered at one of the workstations by a participant responding to the pending market conditions willing to trade a desired volume of the item at a desired price;

determining whether a pending market condition for the item recently changed prior to entry of the hit or lift; and

if a pending market condition recently changed, responsively enabling the participant to refuse to sell or buy at least a portion of the volume of the item associated with the changed market condition.

40. (New) The method of claim 39, wherein the recently changed market condition is volume.

41. (New) The method of claim 39, wherein the determining step comprises detecting that a bid or offer for the item was entered within a given time period prior to entry of the hit or lift.

42. (New) The method of claim 39, wherein the participant may refuse to sell or buy all of the portion of the volume associated with the changed market condition.

43. (New) A method implemented on a distributed workstation computer system for trading an item between participants, said method comprising:

receiving from at least one passive participant at least one bid or offer entered for the item at a select price and volume;

receiving from an aggressor participant a hit or lift to trade, at a defined price, at least all of the volume represented by entered bids or offers;

executing a trade transaction between the aggressor participant and each passive participant whose bid or offer was hit or lifted;

enabling the aggressor participant and a designated passive participant whose bid or offer was hit or lifted to control trading by allowing them to transact additional volume with each other at the defined price to the exclusion of other participants desiring to participate in trading; and

upon the occurrence of a predefined event, automatically executing new transactions involving the other participants at the defined price without enabling the other participants to control trading.

44. (New) The method of claim 43, wherein said predefined event is the timing out of a timer.

45. (New) The method of claim 43, wherein said new transactions are executed after said predefined event based on trade commands entered by the other participants prior to said predefined event.

46. (New) A method implemented on a distributed workstation computer system for trading an item between participants, said method comprising:

receiving from one or more passive participants at least one bid or offer for the item;

receiving from an aggressor participant a hit or lift to trade, at a defined price, a desired volume of the item represented by the bids or offer;

allowing the aggressor participant and at least one of the passive participants a period of exclusivity to control trading by enabling them to transact with one another additional volume of the item at the defined price to the exclusion of another participant desiring to participate in trading; and

upon occurrence of a predefined event, allowing the other participant to trade at the defined price without allowing the other participant to control trading by excluding others from trading.

47. (New) The method of claim 46, wherein the desired volume comprises the entire volume represented by the pending bids or offers.

48. (New) The method of claim 46, wherein the passive participant allowed to control trading is the passive participant who first entered a bid or offer that was hit or lifted by the aggressor participant.

49. (New) A method implemented by a programmed computer system for trading an item between participants, the method comprising:

distributing to the participants information reflecting pending market conditions, said information including bids or offers for the item entered by passive participants at select prices and volumes;

receiving a hit or lift trade command entered by an aggressor participant responding to the market conditions to trade a desired volume of the item at a defined price;

determining whether a hit or lifted bid or offer had aged prior to receipt of the trade command, and responsively (i) executing a trade of the volume of the item associated with an aged bid or offer, and (ii) enabling the aggressor participant to refuse to trade at least a portion of the volume of the item associated with an unaged bid or offer;

allowing the aggressor participant and at least one of the passive participants whose bid or offer was hit or lifted a period of exclusivity to control trading by enabling them to transact with one another additional volume of the item at the defined price to the exclusion of another participant desiring to participate in trading; and

upon occurrence of a predefined event, allowing the other participant to participate in trading at the defined price without allowing the other participant to control trading by excluding others from trading.

50. (New) The method of claim 49, wherein the predefined event is the timing out of a timer.

51. (New) The method of claim 49, wherein said determining step determines that the bid or offer had not aged by detecting that it had been entered within a given period of time prior to entry of the hit or lift command.

52. (New) The method of claim 49, wherein the passive participant allowed a period of exclusivity is the participant who first entered a hit or lifted bid or offer.

53. (New) The method of claim 49, wherein the volume hit or lifted is at least the entire volume represented by the bids or offers.

54. (New) A system for transacting the purchase and sale of a select item between participants, the system comprising:

a plurality of workstations which present to broker and customer participants information reflecting pending market conditions for the item, and for receiving a hit or lift of one or more bids or offers to sell or purchase the item at a desired price and in a desired volume; and

a server, coupled to said workstations, that receives the one or more bids or offers and the hit or lift, and that determines whether a hit or lifted bid or offer recently changed prior to being hit or lifted, wherein;

if a bid or offer recently changed, the central server responsively enables the participant to refuse to sell or buy at least a portion of the volume of the item associated with the changed bid or offer; and

if a bid or offer did not recently change, the central server executes a trade of the volume of the item associated with the unchanged bid or offer.

55. (New) The system of claim 54, wherein said system enables the participant to refuse to sell or buy only if the hit or lift was to sell or buy “

all”

of the item.

56. (New) A system for trading an item between an aggressor participant and one or more passive participants, comprising:

a workstation which presents bids or offers for the item entered into the system by the passive participants at select prices and volumes, and which receives a trade command entered by the aggressor participant to hit or lift one or more of the bids or offers at a desired price and in a desired volume; and

a programmed computer, coupled to the workstation, that (1) receives the bids or offers and trade command, (2) executes a trade of the item at a defined price set by the trade command, (3) enables the aggressor participant and a designated one of the passive participants a period to control subsequent trading by executing additional trade transactions between one another of additional desired volumes of the item at the defined price to the exclusion of other participants desiring to participate in the trading, and (4) upon conclusion of the period automatically executes additional trades of additional volumes of the item at the defined price in response to trade commands entered by the other participants without enabling any of the other participants a period to control the trading.

57. (New) The system of claim 56, wherein the predefined event is the timing out of a timer.

58. (New) The system of claim 56, wherein the trade commands of the other participants may be entered during the period of exclusive trading but are not executed, if at all, until after the conclusion of the exclusive period.

59. (New) The system of claim 56, wherein bids and offers entered by the passive participants are prioritized in a queue by time of entry, and wherein the designated passive participant is the passive participant whose bid or offer was the first entered.

60. (New) A method implemented by a programmed computer system for creating an auction market for items, the system including a plurality of remotely located terminals in communication with one another, the terminals operated by different trading participants including different brokers and/or customers, the method comprising:

presenting to a first participant, in substantially real-time, market condition information for an item as established by transaction commands entered by one or more other participants engaged in the auction;

enabling the first participant to enter a transaction command committing the participant to buy or sell the item in a transaction having a total expected value;

determining whether market condition information for the item changed within a predetermined period of time prior to entry of the transaction command such that said entered transaction command would commit the first participant to a transaction having other than the total expected value and, if so, enabling the first participant to enter a transaction command to refuse at least a portion of such transaction.

61. (New) A method implemented by a programmed computer for conducting an auction for an item among trading participants using terminals remotely coupled over a computer network, said participants including different brokers and/or customers, said method comprising:

distributing to the remote terminals for presentation to the participants, in substantially real-time, information reflecting the pending market condition for the item as established by the participants, said information including at least a current price of the item;

receiving a first transaction command with respect to the item entered at one of the terminals by one of the participants responding to the presented market conditions; and

determining whether a market condition for the item recently changed prior to entry of the first transaction command, and responsively enabling the participant to enter a second transaction command to refuse the transaction.

62. (New) A method implemented by a programmed computer system for creating an auction market, the system including a plurality of remote terminals in communication with one another by which different customer and/or broker participants may enter transaction commands to trade with one another, the method comprising:

presenting to a first participant via the participant'"'"'s remote terminal market condition information for an item as established by transaction commands entered by one or more participants engaged in the auction;

enabling the first participant to enter into the system, via the first participant'"'"'s remote terminal, a transaction command with respect to the item; and

determining whether the market condition information for the item had aged prior to entry of the transaction command and, if not, enabling the first participant to enter another transaction command to refuse, modify or proceed with at least a portion of the transaction.

63. (New) A method implemented by a programmed computer system for creating an auction, the system including a plurality of remote terminals in communication with one another with which different broker and/or customer participants may enter transaction commands, the method comprising:

presenting to a participant via the participant'"'"'s remote terminal, in substantially real-time, market condition information for an item as established by transaction commands entered by other participants engaged in the auction;

enabling the participant to enter into the system, via the participant'"'"'s remote terminal, a transaction command with respect to the item, said transaction command committing the participant to consummate a transaction for the item at a transaction value; and

in response to receipt of the transaction command, allowing the participant to modify, rescind or proceed with the transaction as a function of the age of the market condition existing at the time of receipt of the transaction command.

64. (New) A method implemented by a programmed computer system to conduct an auction for trading an item between participants coupled to the system over a computer network, said participants including different customers and/or brokers desirous of trading with one another, comprising:

presenting to a participant market condition information for an item, said market condition information established by transaction commands entered into the system by other participants engaged in the auction;

receiving from the participant a first transaction command with respect to the item, said command committing the first participant to trade the item in a transaction having a value determined by the market condition information;

upon receipt of the first transaction command, determining the age of the market condition information; and

responsive to the determined age, either (1) automatically executing a trade of the item in accordance with the item'"'"'s market condition information extant when the first transaction command was received, or (2) providing the first participant an opportunity not to commit to trade the item.

65. (New) A networked computer system for transacting the purchase and/or sale of a select item between trading participants, said participants including different brokers and/or customers, the system comprising:

a plurality of remotely located terminals coupled to the network for presenting to said participants information reflecting market conditions for the item as established by transaction commands entered by said participants, the market condition information reflecting the value of an item in terms of a bid or offered price and an associated volume; and

a computer, coupled to the network, programmed to;

(a) receive a participant-entered transaction command to buy or sell the item, and (b) detect that the market condition information for the item recently changed prior to receipt of the transaction command, and responsively enable the participant to enter another transaction command to refuse to buy or sell at least that portion of the volume of the item associated with the recently changed bid or offer.

66. (New) A method implemented by a programmed computer for trading an item between participant customers and/or brokers using remotely located terminals in substantial real-time communication with one another over a computer network, the method comprising:

receiving from a plurality of passive participants bids or offers for the item, the bids or offers entered via the passive participating customers'"'"' terminals;

receiving from an aggressor participant a hit or lift to trade, at a defined price, a desired volume of the item represented by the bids or offers, the hit or lift entered via the aggressor participant'"'"'s terminal;

allowing the aggressor participant and at least one of the passive participants a period of exclusivity to control trading by enabling them to transact with one another additional volume of the item at the defined price to the exclusion of another participant desiring to participate in trading; and

upon occurrence of a predefined event, allowing the other participant to participate in trading at the defined price without allowing the other participant to control trading by excluding others from trading.

67. (New) A method implemented by a programmed computer to conduct an auction for trading an item between participant customers and/or brokers using remotely located terminals in substantial real-time communication with one another over a computer network, the method comprising:

receiving from one or more passive participants at least one bid or offer for the item;

receiving from an aggressor participant a command to commit to trade, at a defined price, a desired volume of the item represented by the bids or offer;

allowing the aggressor participating customer and at least one of the passive participant a period of exclusivity to control trading by enabling them to transact with one another additional volume of the item at the defined price to the exclusion of another participant desiring to participate in trading; and

upon occurrence of a predefined event, allowing the other participant to participate in trading at the defined price without allowing the other participant to control trading by excluding others from trading.

68. (New) A method implemented by a programmed computer to conduct an auction for trading an item between participating customers using remotely located terminals that are in substantial real-time communication with one another over a computer network, the method comprising:

receiving from at least a first participant a first transaction command entered via the first participant terminal, said transaction command committing the first participant to buy or sell the item at a defined price established by the first transaction command;

receiving from a second participating customer participant a second transaction command entered via the second participant'"'"'s terminal, said second transaction command committing the second participant to sell or buy the item at a defined price established by the second transaction command;

allowing the first and second participant a period of exclusivity to control trading by enabling them to negotiate with each other for trading the item to the exclusion of a third participant desiring to participate in the trading; and

upon occurrence of a predefined event, allowing the third participant to participate in negotiations for trading the item without allowing the third participant to control trading by excluding others from trading.