Electronic trading system including an auto-arbitrage feature or name switching feature

• US 20060053074A1
• Filed: 11/04/2005
• Published: 03/09/2006
• Est. Priority Date: 12/12/1995
• Status: Active Grant

• Current Assignee: Thomson Reuters Global Resources Unlimited Company (The Woodbridge Co. Ltd.)
• Original Assignee: Reuters Limited (The Woodbridge Co. Ltd.)
• Inventors: Silverman, David L., Wilton, Rosalyn S.
• Granted Patent: US 7,225,150 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 30/00 Commerce
• 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: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

An electronic trading system includes a plurality of trader terminals for receiving credit parameter data, arbitrage parameter data, and trading data from a trading entity, and a computer connected to the plurality of trader terminals via a communications network that receives and stores the credit parameter data and the trading data. The system also includes a detector circuit or program for automatically detecting an available arbitrage opportunity including a plurality of trades based on the credit parameter data, the arbitrage parameter data, and the trading data. A similar electronic trading system includes an automatic name switch feature wherein the plurality of trader terminals receive name switch parameter data, credit parameter data, and trading data from the trading entity. A circuit or program automatically detects and executes available name switch transactions based on the credit parameter data, the name switch parameter data, and the trading data.

Claims

1. An electronic trading system for traders, the system comprising:

a plurality of trader terminals for receiving credit parameter data for use in determining whether to permit or deny a trade, for receiving from traders trading data including at least one of bid and offer information, and for receiving arbitrage parameter data from the traders comprising at least one of a minimum spread parameter, an average spread parameter, a minimum size parameter, and a maximum size parameter, said plurality of trader terminals including a first trader terminal, a second trader terminal and a third trader terminal;

a communications network in communication with the plurality of trader terminals;

a computer in communication with said plurality of trader terminals via said communications network, said computer matching or denying trades using said credit parameter data;

a detector for automatically detecting potential related trades, said related trades being treated as contingent trades between said first trader terminal and said second trader terminal and between said first trader terminal and said third trader terminal, for creating an arbitrage opportunity based on credit-related discrepancies within a market where a direct trade between said second trader terminal and said third trader terminal would be denied and based on monitoring said trading data, said credit parameter data and said arbitrage parameter data; and

an executing circuit for executing all the detected contingent trades, the executing circuit including a locking circuit for locking trading data for all said contingent trades so as to lock all said contingent trades prior to execution of any of said contingent trades to ensure that said all contingent trades remain available during the execution of said contingent trades;

wherein said executing circuit only executes all the detected contingent trades if the trading data for all the detected contingent trades is locked.

2. The electronic trading system according to claim 1, wherein said executing circuit is adapted to automatically execute the detected contingent trades, the system further comprising a notification circuit for notifying the first trader terminal that contingent trades have been detected and executed and for providing the results of the execution of said contingent trades to the first trader terminal.

3. The electronic trading system according to claim 1, further comprising an alert circuit for generating an alert at the first trader terminal that contingent trades have been detected by said detector, said first trader terminal including an input for receiving an input indication from a trader indicating whether or not to execute said detected contingent trades and said executing circuit being responsive to the input indication for executing said contingent trades.

4. The electronic trading system according to claim 1, wherein said credit parameter data includes data representative of a credit limit for each trading counterparty to which said traders belong, from each other such counterparty.

5. The electronic trading system according to claim 1, wherein said detector is adapted to detect contingent trades based on each of said minimum spread parameter, said average spread parameter, said minimum size parameter, and said maximum size parameter.

6. The electronic trading system according to claim 1, wherein said detector is adapted to detect contingent trades which enable an original trade represented by trading data requested by said second trader terminal and said third trader terminal when credit parameter data relating to said first trader terminal is sufficient with respect to the second and third trading trader terminals to complete said original trade, but a direct trade between the second trader terminal and said third trader terminal would nonetheless be denied.

7. The electronic trading system according to claim 1, wherein said detector is adapted to detect contingent trades which enable an original trade requested by said second trader terminal and said third trader terminal by allowing said second trader terminal to trade with said third trader terminal via said first terminal based upon the credit parameter data, if the credit parameter data indicates sufficient credit for the first trader terminal to trade with the second trader terminal and with the third trader terminal sufficient to complete said original trade, but indicates a direct trade between the second trader terminal and said third trader terminal would be denied.

8. A method for electronic trading using a computer and a plurality of terminals, the computer and plurality of trader terminals in communication via a communications network, the method comprising:

receiving via said communications network, at said computer, from said plurality of trader terminals, credit parameter data, trading data and arbitrage parameter data, said trading data including bid and offer information, said arbitrage parameter data comprising at least one of a minimum spread parameter, an average spread parameter, a minimum size parameter and a maximum size parameter;

storing said credit parameter data and said trading data via said computer;

automatically detecting potential related trades via said computer, said potential related trades being treated as contingent trades between a first trader terminal and a second trader terminal of the plurality of trader terminals and between the first trader terminal and a third trader terminal of the plurality of trader terminals;

creating an arbitrage opportunity via said computer based on credit-related discrepancies within a market if the computer determines a direct trade between the second trader terminal and said third trader terminal would be denied based on monitoring said trading data, said credit parameter data, and said arbitrage parameter data;

locking trading data for all said contingent trades via said computer so as to lock all said contingent trades prior to execution of any of them, to ensure that said all contingent trades remain available during the execution of said contingent trades; and

if said computer determines all said contingent trades are locked, executing said contingent trades.

9. The method according to claim 8, further comprising the computer notifying the first trader terminal that contingent trades have been detected and executed, said step of notifying including providing results of the execution of said contingent trades to the first trader terminal.

10. The method according to claim 8, further comprising:

generating an alert at the first trader terminal that contingent trades have been detected by said detector;

receiving an input indication at the first trader terminal from a trader whether to pursue or not pursue said detected contingent trades; and

executing said detected contingent trades in dependence upon the input indication.

11. The method according to claim 8, wherein said credit parameter data includes a first credit limit for a first potential trading counterparty associated with the first trader terminal with respect to a second potential trading counterparty associated with the second trader terminal and a second credit limit for the first potential trading counterparty with respect to a third potential trading counterparty associated with the third trader terminal.

12. The method according to claim 11, wherein said credit parameter data further includes a third credit limit for the second potential trading counterparty with respect to the third potential trading counterparty and a fourth credit limit for the second potential trading counterparty with respect to the first potential trading counterparty.

13. The method according to claim 11, wherein said credit parameter data further includes a fifth credit limit for the third potential trading counterparty with respect to the first potential trading counterparty and a sixth credit limit for the third potential trading counterparty with respect to the second potential trading counterparty.

14. The method according to claim 11, wherein the determination of contingent trades is based on each of said minimum spread parameter, said average spread parameter, said minimum size parameter and said maximum size parameter.

15. A computer for use in an electronic trading system, the computer comprising:

a network interface for connecting to a plurality of trader terminals via a communications network, for receiving credit parameter data, trading data and arbitrage parameter data from said of trader terminals, said trading data including bid and offer information, said arbitrage parameter data comprising at least one of a minimum spread parameter, an average spread parameter, a minimum size parameter and a maximum size parameter;

a matching circuit for matching or denying trades using said credit parameter data;

a detector for automatically detecting potential contingent trades between a first trader terminal and a second trader terminal and between the first trader terminal and a third trader terminal making up an arbitrage opportunity created by credit-related discrepancies within a market where a direct trade between said second trader terminal and said third trader terminal would be denied by the computer based on said credit parameter data, said detecting based on monitoring said trading data, credit parameter data, and said arbitrage parameter data; and

an executing circuit for executing said contingent trades; and

a locking circuit for locking trading data for all said contingent trades so as to lock all said contingent trades prior to execution of any of said contingent trades to ensure that said all contingent trades remain available during the execution of said contingent trades;

wherein said executing circuit is adapted to perform said contingent trades only if trading data for all said trades is locked.

16. A computer according to claim 15, wherein said executing circuit is adapted to automatically execute the detected contingent trades, the computer further comprising a notification circuit for notifying the first trader terminal that contingent trades have been detected and executed, and for providing the results of the execution of said contingent trades to the first trader terminal.

17. The computer according to claim 15 further comprising:

an alert circuit for generating an alert notification for transmission to said trader terminals notifying that contingent trades have been detected by said detector; and

an input for receiving an input indication from a trader indicating whether or not to execute said detected contingent trades;

wherein said executing circuit is responsive to the received input indication to perform the execution of said contingent trades in dependence upon the received input indication.

18. The computer according to claims 15, wherein said credit parameter data includes data representative of a credit parameter data includes data representative of a credit limit for each trading counterparty to which said traders belong, from each other such counterparty.

19. The computer according to claim 15, wherein said detector is adapted to detect contingent trades based on each of said minimum spread parameter, said average spread parameter, said minimum size parameters, and said maximum size parameter.

20. The computer according to claim 15, wherein said detector is adapted to detect contingent trades which enable an original trade represented by trading data requested by said second trader terminal and said third trader terminal, where credit parameter data relating to said first trader terminal is sufficient in respect of the second and third trader terminals to complete said original trade, but a direct trade between the second trader terminal and said third trader terminal would be denied.