Credit management for electronic brokerage system

• US 20050228748A1
• Filed: 06/07/2005
• Published: 10/13/2005
• Est. Priority Date: 02/03/1992
• Status: Active Grant

• Current Assignee: EBS Dealing Resources, Inc. (CME Group Incorporated)
• Original Assignee: EBS Dealing Resources, Inc. (CME Group Incorporated)
• Inventors: Dunne, Michael F., Hartheimer, Richard, Togher, Michael
• Granted Patent: US 7,610,238 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: H04L 12/1804 for stock exchange and similar applications

Abstract

An anonymous trading system (FIG. 1) identifies the best bids and offers (QuoteSubmit, FIG. 3) from those counterparties (WS A1a1) with which each party (WS A1b1, WS A1b2, . . . . WSA2a2) is currently eligible to deal, while maintaining the anonymity of the potential counterparty and the confidentiality of any specific credit limitations imposed by the anonymous potential counterparty. To that end, each bid or offer (QuoteSubmit, FIG. 3) for a particular type of financial instrument is prescreened by the system for compatibility with limited credit information (for example, a one bit flag indicating whether a predetermined limit has already been exceeded) and an anonymous “Dealable” price (24,26) is calculated for each of the traders (WS A1b, . . . WS A2a) dealing with that particular financial instrument.

Claims

1. A computerized method of allowing traders to trade financial instruments at a plurality of trading floors, some, but not all, of the trading floors being credit bearing counter-parties which extend bilateral credit to one another, at least one of the trading floors being associated with one or more taker screens at which a trader can trade the financial instruments, at least a first of the taker screens displaying at least quotes made by other trading floors and permitting a trader using the first taker screen to accept certain ones of the quotes, the first taker screen having a best dealable price area and a best market price area, the method comprising:

displaying in the best market price area of the first taker screen of the computerized trading system the best market quote made by one or more traders at any of the trading floors irrespective of whether or not the quote originated from a trading floor which is a credit bearing counter-party to the trading floor with which the first taker screen is associated;

simultaneously displaying in the best dealable price area of the first taker screen the best dealable quote made by one or more credit bearing counter-parties of the trading floor with which the first taker screen is associated whereby the best dealable quote has been prescreened for credit; and

permitting the trader using the first taker screen to accept the best dealable quote displayed in the best dealable price area but preventing that trader from accepting the best market quote displayed in the best market price area.

2. The method of claim 1, wherein the best dealable quote for a preset quantity of financial instruments is displayed in the best dealable price area.

3. The method of claim 1, wherein the best dealable quote of any quantity is displayed in the best dealable price area.

4. The method of any one of claims 1, 2 and 3, wherein only the best market bid and/or offer is displayed in the best market price area and only the best dealable bid and/or offer is displayed in the best dealable price area.

5. A method for trading financial instruments between a plurality of traders, each trader being associated with a respective one of a plurality of trading floors, the plurality of trading floors being connected together by a computerized trading system, the method comprising:

a first trader using a first trader terminal which is associated with a first trading floor sending a quote to the trading system indicating a price at which he or she is willing to trade a financial instrument with other traders associated with other trading floors which have been determined to have credit with the first trading floor; and

informing the first trader that his or her quote is capable of being accepted by at least a second trader using a second trader terminal which is associated with a second trading floor which has credit with the first trading floor.

6. The method of claim 5, wherein the first trader is informed that his or her quote is capable of being accepted by at least the second trader by making a visual change to the first trader terminal.

7. The method of claim 5, wherein the quote of the first trader is capable of being accepted by at least the second trader when the first trader'"'"'s quote is the best quote, which can be accepted by the second trader.

8. The method of claim 5, further including automatically withdrawing the quote made by the first trader whenever a predetermined condition occurs.

9. The method of claim 8, wherein the predetermined condition is the fact that the first trader'"'"'s quote is bettered by a quote, made by another trader.

10. The method of claim 8, wherein the predetermined condition is set by the first trader.

11. The method of claim 8, wherein the predetermined condition is the passage of a set amount of time.

12. The method of claim 5, further including informing the first trader that his or her quote is the equal in price to the best quote made by any other trader but is second in time to that quote.

13. The method of any one of claims 5 through 12, wherein the credit is bilateral credit.

14. A trader terminal associated with a first trader using a computerized trading system, the trader terminal comprising:

a display which provides information to the first trader concerning bids and/or offers entered into the computerized trading system by other traders, the display having;

a best bid display area indicating only the best bid entered into the computerized trading system by at least one other trader with whom it has been determined the first trader has credit; and

a best offer display area indicating only the best offer entered into the computerized trading system by at least one other trader with whom it has been determined the first trader has credit.

15. The trader terminal of claim 14, wherein the display also displays information concerning the best bid and/or offer presently active in the computerized trading system, whether such bid and/or offer is from a trader with whom the first trader has credit or not, such information being displayed outside of the best bid and best offer display areas.

16. The trader terminal of claim 14, wherein the best bid entered into the trading system that the first trader can accept is the best bid for a predetermined quantity of products being traded in the computerized trading system by one or more traders with which the first trader has credit.

17. The trader terminal claim 14, wherein each trader is associated with a credit granting entity.

18. The trader terminal claim 17, wherein each credit granting entity extends credit to respective traders by extending credit to an entity with which that respective trader is associated.

19. A computerized trading system, comprising:

a central computer system comprising at least one computer;

a plurality of trader terminals, each of which is used by an associated trader to send quotes to the central computer system;

the central computer system operable to receive the quotes and to forward at least some of the quotes to trader terminals associated with traders other than the trader from whom the quote originated without informing the trader associated with one of such trader terminals of the identity of the trader from whom the quote originated;

the central computer system forwarding information to each trader terminal indicating when a quote originating from its associated trader can be accepted by a trader associated with another of the trader terminals and with whom it has been determined he or she has credit; and

each trader terminal which has been so informed giving its associated trader the option of canceling the quote.

20. A computerized trading system according to claim 19, wherein the central computer system forwards information to each trader terminal indicating when a quote originating from its associated trader can be accepted by a trader associated with another of the trader terminals as a function of bilateral credit.

21. A method of trading on a computerized trading system, the method comprising:

entering a bid from a first trader into the trading system using a trader terminal associated with the first trader;

the computerized trading system informing the first trader that the bid can be accepted by at least one other trader who is using the computerized trading system and with whom it has been determined the first trader has credit; and

thereafter the computerized trading system providing the first trader with the option of removing the bid from the trading system using his or her associated trader terminal.

22. The method of trading on a computerized trading system of claim 21, wherein the credit is bilateral credit.

23. A method of trading on a computerized trading system, the method comprising:

entering an offer from a first trader into the computerized trading system using a trader terminal associated with the first trader;

the computerized trading system informing the first trader that the offer can be accepted by at least one other trader who is using the computerized trading system and with whom it has been determined the first trader has credit; and

thereafter

the computerized trading system providing the first trader with the option of removing the offer from the trading system using his or her associated trader terminal.

24. The method of trading on a computerized trading system of claim 23, wherein the credit is bilateral credit.

25. A method of trading on a computerized trading system which enables traders to accept quotes entered into the trading system by other traders using the trading system based upon both the price of the quotes and the time at which the quotes were entered into the trading system, the method comprising:

entering a quote from a first trader into the trading system using a trader terminal associated with a first trader;

the trading system informing the first trader that his or her quote cannot yet be accepted by a second trader with whom it has been determined he or she has credit and who is using the trading system but is equal in price to another quote entered into the trading system by a third trader whose quote can be accepted by the second trader; and

thereafter

the trading system providing the first trader with the option of removing his or her quote from the trading system using his or her associated trader terminal.

26. The method of trading on a computerized trading system of claim 25, wherein the credit is bilateral credit.

27. A method of trading on a computerized trading system of the type which permits traders using the trading system to accept the best quote available to it, the method comprising:

entering a quote from a first trader into the trading system; and

thereafter

the computerized trading system automatically canceling the quote whenever it was the best quote available to a second trader with whom it has been determined the first trader has credit but was subsequently bettered by a quote from a third trader, which subsequent quote could be accepted by the second trader.

28. The method of trading on a computerized trading system of claim 27, wherein the credit is bilateral credit.

29. A method of permitting traders to trade on a computerized trading system, the method comprising:

maintaining a credit matrix showing which trading entities using the trading system presently extend credit to other trader entities using the trading system;

entering quotes from a plurality of the trading entities into the trading system;

determining which of the trading entities are permitted to accept each respective quote based on at least the credit matrix; and

permitting each trading entity to accept only those quotes the trading entity is permitted to accept.

30. The method of claim 29, further comprising:

setting a credit limit that a first one of the trading entities extends to a second one of the trading entities;

reducing the credit limit each time a trade is made between the first and second trading entities; and

changing the credit matrix each time the credit limit falls below a specified level.

31. The method of claim 30, wherein the specified level is a first specified level and further comprising:

warning the first trading entity that the credit limit has fallen below a second specified level, higher than the first specified level; and

thereafter

permitting the first trading entity to increase the credit limit.

32. The method of claim 30, wherein the specified level is a specified amount.

33. The method of claim 30, wherein the specified level is a specified percentage of the first credit limit.

34. The method of claim 29, wherein at least one of the trading entities permits a plurality of traders to trade on its behalf, at least two of those traders using different trading terminals to trade simultaneously on the trading system.

35. The method of claim 29, further comprising the step of:

the determined trading entity accepting a respective quote.