Systems and methods for bid/offer liquidity spread trading

• US 20050038732A1
• Filed: 08/13/2003
• Published: 02/17/2005
• Est. Priority Date: 08/13/2003
• Status: Abandoned Application

• Current Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Original Assignee: eSpeed Incorporated (BGC Group, Inc.)
• Inventors: Lutnick, Howard W., Sweeting, Michael
• Application Number:
  US10/641,196
• Publication Number:
  US 20050038732A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

Apparatus and methods for automatically executing a trade of an item between a market participant who issues a request for a quote for an item and a market participant who responds to the request are provided. In some embodiments, an automatic trade may be conditioned upon the acknowledgement, by the participant who issues the request, of an obligation to execute the trade. In some embodiments, the invention may include one or more modules for receiving the request, receiving a quote, receiving a responsive number of units of the item to be traded, decrementing a time interval in which the participant who issues the request is required to trade, and, if that participant does not trade within the time interval, trading on behalf of that participant.

Claims

1. A trading system comprising:

a software quote request reception module operative to receive from a requesting participant a request for a quote for at least one item;

a software quote reception module operative to receive from at least one of a first responsive participant and a second responsive participant a quote for said item; and

a software trade supervision module operative to impose a penalty on said requesting participant if said requesting participant does not execute a trade, said trade exchanging said item between said requesting participant and at least one of said responsive participants.

2. The system of claim 1 wherein said supervision module is operative to impose said penalty if:

(1) said request comprises a spread value;

(2) said quote comprises a bid and an offer;

(3) the difference between said offer and said bid is no greater than said spread value; and

(4) said requesting participant does not execute said trade.

3. The system of claim 2 wherein said supervision module is further operative to impose said penalty at the end of a time interval, said interval starting after said software quote request reception module receives said request.

4. The system of claim 1 wherein said supervision module is operative to impose said penalty if:

(1) said request comprises a bid value and an offer value;

(2) said quote comprises a bid and an offer;

(3) said bid is no less than said bid value and said offer is no greater than said offer value; and

(4) said requesting participant does not execute said trade.

5. The system of claim 4 wherein said supervision module is further operative to impose said penalty at the end of a time interval, said interval starting after said software quote request reception module receives said request.

6. The system of claim 1 wherein said quote comprises a bid.

7. The system of claim 1 wherein said quote comprises an offer.

8. The system of claim 1 wherein said quote comprises a bid and an offer.

9. The system of claim 1 further comprising a software graphical user interface module operative to provide to said requesting participant a control configured to receive from said requesting participant a buy command to execute said trade.

10. The system of claim 9 wherein said interface module is further operative to highlight said control.

11. The system of claim 1 further comprising a software graphical user interface module operative to provide to said requesting participant a control configured to receive from said requesting participant a sell command to execute said trade.

12. The system of claim 11 wherein said interface module is further operative to highlight said control.

13. The system of claim 1 further comprising a software quote display module operative to provide a display of said quote to said requesting participant;

wherein said software supervision module is further operative to impose said penalty if said requesting participant exits said display.

14. The system of claim 1 further comprising a software best-bid transfer module;

wherein;

when said quote reception module receives quotes comprising a first bid and a second bid,

said best-bid transfer module is operative to communicate to said requesting participant the better of said first bid and said second bid.

15. The system of claim 14 wherein the better of said first and second bids is the lesser of said first and second bids.

16. The system of claim 14 wherein the better of said first and second bids is the greater of said first and second bids.

17. The system of claim 1 further comprising a software best-offer transfer module;

wherein;

when said quote reception module receives quotes comprising a first offer and a second offer,

said best-offer transfer module is operative to communicate to said requesting participant the better of said first offer and said second offer.

18. The system of claim 17 wherein the better of said first and second offers is the lesser of said first and second offers.

19. The system of claim 17 wherein the better of said first and second offers is the greater of said first and second offers.

20. The system of claim 1 further comprising a software quote transfer module operative to communicate said quote to said requesting participant.

21. The system of claim 1 further comprising, when said quote reception module receives a first quote from said first responsive participant and a second quote from said second responsive participant, a quote transfer module operative to communicate to said requesting participant a bid presented in one of said first and second quotes and an offer presented in one of said first and second quotes.

22. The system of claim 1 further comprising a software min/max size reception module operative to receive from said requesting participant at least one of a minimum size defining a minimum number of units of said item and a maximum size defining a maximum number of units of said item.

23. The system of claim 22 further comprising a software responsive size reception module operative to receive from at least one of said first and second responsive participants a responsive size, said responsive size defining a number of units of said item.

24. The system of claim 23 further comprising a software quote transfer module operative to communicate said quote to said requesting participant.

25. The system of claim 1 wherein said penalty is a fine.

26. The system of claim 25 wherein said fine is charged to said requesting participant.

27. The system of claim 25 wherein said fine is charged when said requesting participant executes a subsequent trade.

28. The system of claim 25 wherein said fine is equal to a portion of a market price of said item.

29. The system of claim 1 wherein:

said penalty is the issuance, on behalf of said requesting participant, of a system command to execute said trade; and

said supervision module is further operative to issue said system command.

30. The system of claim 29 wherein, when said quote comprises a low yield, said system command comprises a command to buy said item from one of said first and second responsive participants at a penalty yield that is lower than said low yield.

31. The system of claim 29 wherein, when said quote comprises a high yield, said system command comprises a command to sell said item to one of said first and second responsive participants at a penalty yield that is higher than said high yield.

32. The system of claim 29 wherein said supervision module is operative to issue said system command at the end of a time interval, said interval starting after said software quote request reception module receives said request.

33. The system of claim 32 wherein said interval starts when said quote reception module receives said quote.

34. The system of claim 32 further comprising a software time interval selection module operative to select said time interval.

35. The system of claim 1 further comprising, when:

(a) said request comprises a spread value;

(b) said quote comprises a bid and an offer; and

(c) the difference between said offer and said bid is no greater than said spread value,

a software access denial module operative to deny access by said requesting participant to any subsequent quote that may be proffered in response to said request and received by said system.

36. The system of claim 35 wherein said denial module is further operative to notify at least one observing participant that said request is satisfied.

37. The system of claim 36 wherein said denial module is further operative to notify said observing participant, if said quote is withdrawn, that said request is no longer satisfied.

38. The system of claim 29 wherein said command comprises a command to sell said item to at least one of said first and second responsive participants at a penalty price.

39. The system of claim 38 wherein, when said request comprises a bid value, said penalty price is equal to said bid value.

40. The system of claim 38 wherein, when said request comprises a bid value, said penalty price is less than said bid value.

41. The system of claim 38 wherein, when said quote comprises a bid, said penalty price is equal to said bid.

42. The system of claim 38 wherein, when said quote comprises a bid, said penalty price is less than said bid.

43. The system of claim 29 wherein said command comprises a command to buy said item from at least one of said first and second responsive participants at a penalty price.

44. The system of claim 43 wherein, when said request comprises an offer value, said penalty price is equal to said offer value.

45. The system of claim 43 wherein, when said request comprises an offer value, said penalty price is greater than said offer value.

46. The system of claim 43 wherein, when said quote comprises an offer, said penalty price is equal to said offer.

47. The system of claim 43 wherein, when said quote comprises an offer, said penalty price is greater than said offer.

48. The system of claim 29 wherein:

said system command is a first command;

said supervision module is further operative to issue, on behalf of said requesting participant, a second command;

said first command comprises a command to sell at least one of said at least one item to said first responsive participant at a first penalty price; and

said second command comprises a command to buy at least one of said at least one item from said second responsive participant at a second penalty price.

49. The system of claim 48 wherein, when said request comprises a bid value, said first penalty price is equal to said bid value.

50. The system of claim 48 wherein, when said request comprises an offer value, said second penalty price is equal to said offer value.

51. The system of claim 48 wherein, when said request comprises a bid value, said first penalty price is less than said bid value.

52. The system of claim 48 wherein, when said request comprises an offer value, said second penalty price is greater than said offer value.

53. The system of claim 48 wherein, when said quote comprises a bid, said first penalty price is equal to said bid.

54. The system of claim 48 wherein, when said quote comprises a bid, said first penalty price is less than said bid.

55. The system of claim 48 wherein, when said quote comprises an offer, said second penalty price is equal to said offer.

56. The system of claim 41 wherein, when said quote comprises an offer, said second penalty price is greater than said offer.

57. A method for electronically executing a trade, said method comprising:

receiving from a requesting participant a request for a quote for at least one item;

receiving from at least one of a first responsive participant and a second responsive participant a quote for said item; and

imposing a penalty on said requesting participant if said requesting participant does not execute a trade, said trade exchanging said item between said requesting participant and at least one of said responsive participants.

58. The method of claim 57 wherein said imposing comprises imposing said penalty if:

(1) said request comprises a spread value;

(2) said quote comprises a bid and an offer;

(3) the difference between said offer and said bid is no greater than said spread value; and

(4) said requesting participant does not execute said trade.

59. The method of claim 58 further comprising decreasing a time interval;

wherein said imposing comprises imposing said penalty after said time interval expires.

60. The method of claim 59 wherein said decreasing a time interval comprises beginning to decrease said time interval after said quote is received.

61. The method of claim 57 wherein said imposing comprises imposing said penalty if:

(1) said request comprises a bid value and an offer value;

(2) said quote comprises a bid and an offer;

(3) said bid is no less than said bid value and said offer is no greater than said offer value; and

(4) said requesting participant does not execute said trade.

62. The method of claim 61 further comprising decreasing a time interval;

wherein said imposing comprises imposing said penalty after said time interval expires.

63. The method of claim 62 wherein said decreasing a time interval comprises beginning to decrease said time interval after said quote is received.

64. The method of claim 57 wherein said quote comprises a bid.

65. The method of claim 57 wherein said quote comprises an offer.

66. The method of claim 57 wherein said quote comprises a bid and an offer.

67. The method of claim 57 further comprising, when:

(a) said request comprises a spread value;

(b) said quote comprises a bid and an offer; and

(c) the difference between said offer and said bid is no greater than said spread value,

denying access by said requesting participant to any subsequent quote that may be received in said receiving from at least one of said first and second responsive participants.

68. The method of claim 67 wherein said denying access comprises notifying at least one observing participant that said request is satisfied.

69. The method of claim 68 wherein said denying access further comprises, if said quote is withdrawn, notifying said observing participant that said request is no longer satisfied.

70. The method of claim 57 further comprising providing to said requesting participant a control configured to receive from said requesting participant a buy command to execute said trade.

71. The method of claim 70 further comprising highlighting said control.

72. The method of claim 57 further comprising providing to said requesting participant a control configured to receive from said requesting participant a sell command to execute said trade.

73. The method of claim 72 further comprising highlighting said control.

74. The method of claim 57 further comprising:

providing a display of said quote to said requesting participant;

wherein said imposing comprises imposing said penalty if said requesting participant exits said display.

75. The method of claim 57 further comprising communicating to said requesting participant the better of a first bid and a second bid, said first and second bids received in said receiving from at least one of said first and second responsive participants.

76. The method of claim 75 wherein the better of said first and second bids is the lesser of said first and second bids.

77. The method of claim 75 wherein the better of said first and second bids is the greater of said first and second bids.

78. The method of claim 57 further comprising communicating to said requesting participant the better of a first offer and a second offer, said first and second offers received in said receiving from at least one of said first and second responsive participants.

79. The method of claim 78 wherein the better of said first and second offers is the lesser of said first and second offers.

80. The method of claim 78 wherein the better of said first and second offers is the greater of said first and second offers.

81. The method of claim 57 further comprising, communicating said quote to said requesting participant.

82. The method of claim 57 further comprising, when said receiving from at least one of said first and second responsive participants comprises receiving a first quote from said first responsive participant and a second quote from said second responsive participant, communicating to said requesting participant a bid presented in one of said first and second quotes and an offer presented in one of said first and second quotes.

83. The method of claim 57 further comprising receiving from said requesting participant at least one of a minimum size defining a minimum number of units of said item and a maximum size defining a maximum number of units of said item.

84. The method of claim 83 further comprising a receiving from at least one of said first and second responsive participants a responsive size, said responsive size defining a number of units of said item.

85. The method of claim 84 further comprising communicating said quote to said requesting participant

86. The method of claim 57 wherein said penalty is a fine.

87. The method of claim 86 wherein said imposing comprises charging said fine to said requesting participant.

88. The method of claim 86 wherein said imposing comprises charging said fine to said requesting participant when said requesting participant executes a subsequent trade.

89. The method of claim 86 wherein said fine is equal to a portion of a market price of said item.

90. The method of claim 57 wherein said imposing comprises issuing, on behalf of said requesting participant, a system command to execute said trade.

91. The method of claim 90 wherein, when said quote comprises a low yield, said system command comprises a command to buy said item from one of said first and second responsive participants at a penalty yield that is lower than said low yield.

92. The method of claim 90 wherein, when said quote comprises a high yield, said system command comprises a command to sell said item to one of said first and second responsive participants at a penalty yield that is higher than said high yield.

93. The method of claim 90 wherein said issuing comprises issuing said system command at the end of a time interval, said interval starting after said software quote request reception module receives said request.

94. The method of claim 93 wherein said interval starts when, in said receiving from at least one of said first and second responsive participants, said quote is received.

95. The method of claim 93 further comprising selecting said time interval.

96. The method of claim 90 wherein said command comprises a command to sell said item to at least one of said first and second responsive participants at a penalty price.

97. The method of claim 96 wherein, when said request comprises a bid value, said penalty price is equal to said bid value.

98. The method of claim 96 wherein, when said request comprises a bid value, said penalty price is less than said bid value.

99. The method of claim 96 wherein, when said quote comprises a bid, said penalty price is equal to said bid.

100. The method of claim 96 wherein, when said quote comprises a bid, said penalty price is less than said bid.

101. The method of claim 90 wherein said command comprises a command to buy said item from at least one of said first and second responsive participants at a penalty price.

102. The method of claim 101 wherein, when said request comprises an offer value, said penalty price is equal to said offer value.

103. The method of claim 101 wherein, when said request comprises an offer value, said penalty price is greater than said offer value.

104. The method of claim 101 wherein, when said quote comprises an offer, said penalty price is equal to said offer.

105. The method of claim 101 wherein, when said quote comprises an offer, said penalty price is greater than said offer.

106. The method of claim 90 wherein:

said system command is a first command;

said imposing further comprises issuing, on behalf of said requesting participant, a second command;

said first command comprises a command to sell at least one of said at least one item to said first responsive participant at a first penalty price; and

said second command comprises a command to buy at least one of said at least one item from said second responsive participant at a second penalty price.

107. The method of claim 106 wherein, when said request comprises a bid value, said first penalty price is equal to said bid value.

108. The method of claim 106 wherein, when said request comprises an offer value, said second penalty price is equal to said offer value.

109. The method of claim 106 wherein, when said request comprises a bid value, said first penalty price is less than said bid value.

110. The method of claim 106 wherein, when said request comprises an offer value, said second penalty price is greater than said offer value.

111. The method of claim 106 wherein, when said quote comprises a bid, said first penalty price is equal to said bid.

112. The method of claim 106 wherein, when said quote comprises a bid, said first penalty price is less than said bid.

113. The method of claim 106 wherein, when said quote comprises an offer, said second penalty price is equal to said offer.

114. The method of claim 106 wherein, when said quote comprises an offer, said second penalty price is greater than said offer.