System and method for managing trading between related entities

• US 20060218071A1
• Filed: 03/28/2005
• Published: 09/28/2006
• Est. Priority Date: 03/28/2005
• Status: Abandoned Application

• Current Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Original Assignee: eSpeed Incorporated (BGC Group, Inc.)
• Inventors: Sweeting, Michael
• Application Number:
  US11/091,137
• Publication Number:
  US 20060218071A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A method for managing electronic trading is provided. In an electronic market having trade matching rules, a plurality of first orders each associated with an account are received. A contra order is also received at the electronic market. For each of one or more first orders, it is electronically determined whether that order is a related first order by determining whether the account associated with that order has a particular relationship with the particular account associated with the contra order. Without intentionally introduced delay, one or more particular first orders, including one or more related first orders, are electronically determined to trade with the contra order based at least on the trade matching rules and the determination of related first orders. One or more trades between the one or more particular first orders and the contra order are automatically executed.

Claims

1. A method for managing electronic trading, comprising:

in an electronic market having trade matching rules, receiving a plurality of first orders, each associated with an account, and receiving a contra order associated with a particular account;

for each of one or more first orders, electronically determining whether that first order is a related first order by determining whether the account associated with that first order has a particular relationship with the particular account associated with the contra order; and

without intentionally introduced delay, electronically determining one or more particular first orders, including one or more related first orders, to trade with the contra order based at least on the trade matching rules and the determination of related first orders; and

automatically executing one or more trades between the one or more particular first orders and the contra order.

2. The method of claim 1, wherein:

each first order and the contra order have a price;

the price of the contra order matches or crosses the price of a subset of one or more first orders in the order list; and

electronically determining whether each of one or more first orders is a related first order comprises electronically determining whether each of the subset of first orders is a related first order.

3. The method of claim 1, comprising automatically displaying to the market an indication of the one or more trades between the one or more related first orders and the contra order trade such that market participants not associated with the trade are notified of the one or more trades.

4. The method of claim 1, wherein determining one or more particular first orders to trade with the contra order based at least on the trade matching rules and the determination of related first orders comprises:

determining at least one first trade to execute between the contra order and at least one related first order;

automatically executing the at least one first trade;

if, after accounting for the at least one first trade, any portion of the contra order remains available to be traded, determining, based on the trade matching rules, at least one second trade to execute between the contra order and at least one non-related first order; and

automatically executing the at least one second trade.

5. The method of claim 4, comprising:

for at least one of the one or more related first orders, not displaying to the market an indication of the particular first trade between that related first order and the contra order trade such that market participants not associated with the trade are not notified of the particular first trade;

automatically displaying to the market an indication of each second trade between a non-related first order and the contra order trade such that market participants not associated with the trade are notified of each second trades.

6. The method of claim 5, comprising:

each first order having a size;

displaying to market participants having access to the electronic market an accumulating count of the size of first orders traded at one or more prices;

wherein not displaying to the market an indication of the particular first trade such that market participants not associated with the trade are not notified of the particular first trade comprises not incrementing the displayed accumulating count to account for the particular first trade; and

wherein automatically displaying to the market an indication of each second trade such that market participants not associated with the trade are notified of each second trade comprises incrementing the displayed accumulating count to account for each second trade.

7. The method of claim 1, wherein:

the trade matching rules of the electronic market include;

price/time priority matching rules operable to automatically assign a priority to each first order based on a price/time priority algorithm; and

in-house matching rules operable to automatically adjust the priority of one or more first orders based on the determination of related first orders; and

determining one or more particular first orders to trade with the contra order comprises determining one or more particular first orders to trade with the contra order based at least on the priority of first orders defined by both the price/time priority matching rules and the in-house matching rules.

8. The method of claim 7, wherein:

each first order has a price; and

the in-house matching rules are operable to automatically enhance the priority of related first orders with respect to non-related first orders having the same price.

9. The method of claim 7, wherein:

each first order has a price; and

the in-house matching rules are operable to automatically enhance the priority of related first orders only with respect to non-related first orders having the same price.

10. The method of claim 1, wherein:

the trade matching rules of the electronic market include;

pro rata matching rules operable to automatically assign a pro rata portion of each of multiple first orders to trade with another order; and

in-house matching rules operable to automatically adjust the pro rata portion of one or more first orders determined to trade with another order based on the determination of related first orders; and

determining one or more particular first orders to trade with the contra order comprises increasing the pro rata portions of one or more related first orders to trade with the contra order with respect to one or more non-related first orders to trade with the contra order based at least on both the pro rata matching rules and the in-house matching rules.

11. The method of claim 10, wherein:

each first order has a price; and

the in-house matching rules are operable to automatically increase the pro rata portion of related first orders with respect to non-related first orders having the same price.

12. The method of claim 10, wherein:

each first order has a price; and

the in-house matching rules are operable to automatically increase the pro rata portion of related first orders only with respect to non-related first orders having the same price.

13. The method of claim 1, wherein:

the trade matching rules of the electronic market include;

auction matching rules operable to manage an auction to determine multiple first orders qualified to win an auction to trade with another order, each first order comprising a final auction entry in the auction; and

in-house matching rules operable to automatically determine one or more auction winning first orders from the multiple qualified first orders based on the determination of related first orders; and

determining one or more particular first orders to trade with the contra order comprises determining one or more auction winning first orders based at least on the auction matching rules and the in-house matching rules.

14. The method of claim 13, wherein:

each final auction entry in the auction has a price; and

each of the multiple first orders qualified to win an auction has the same price.

15. The method of claim 1, wherein a particular account associated with one or more particular received first orders is a proxy for multiple subsidiary accounts.

16. The method of claim 1, wherein determining one or more particular first orders to trade with the contra order based at least on the trade matching rules and the determination of related first orders comprises:

if one or more first orders at a particular price are determined to be related first orders, automatically determining at least one trade to be executed between the contra order and at least one of the related first orders at the particular price; and

if none of the first orders at the particular price are determined to be related first orders, automatically determining at least one trade to be executed between the contra order and at least one of the non-related first orders at the particular price.

17. The method of claim 1, further comprising:

placing the plurality of received first orders into a buy order list maintained by the electronic market, each buy order having a bid price; and

wherein the contra order comprises a sell order having an offer price lower than or matching the bid price of one or more buy orders in the buy order list.

18. The method of claim 1, further comprising:

placing the plurality of received first orders into a sell order list maintained by the electronic market, each sell order having an offer price; and

wherein the contra order comprises a buy order having a bid price higher than or matching the offer price of one or more sell orders in the sell order list.

19. The method of claim 1, comprising:

placing the received first orders in a sequence in a first order list;

displaying to market participants having access to the electronic market the sequence of the first orders in the first order list;

wherein electronically determining whether each of one or more first orders is a related first order comprises;

electronically determining that a first particular order at the front of the first order list is not a related first order; and

electronically determining that a second particular order not at the front of the first order list is a related first order; and

wherein determining one or more particular first orders to trade with the contra order based at least on the trade matching rules and the determination of related first orders comprises determining the second particular order, but not the first particular order, to trade with the contra order; and

automatically executing a trade between the contra order and the second particular order.

20. The method of claim 19, wherein the first particular order and the second particular order have the same price.

21. The method of claim 19, further comprising not displaying to the market an indication of the trade between the contra order and the second particular order such that market participants not associated with the trade are not notified of the trade.

22. The method of claim 1, wherein electronically determining one or more particular first orders to trade with the contra order without intentionally introduced delay comprises determining one or more particular first orders to trade with the contra order without waiting for input that may influence the determination of the one or more particular first orders to trade with the contra order.

23. The method of claim 1, wherein electronically determining whether each of one or more first orders is related to the contra order comprises determining whether the account associated with that first order and the particular account associated with the contra order are associated with the same company.

24. The method of claim 1, wherein electronically determining whether each of one or more first orders is related to the contra order comprises determining whether the account associated with that first order and the particular account associated with the contra order are associated with the same legal entity.

25. The method of claim 1, wherein electronically determining whether each of one or more first orders is related to the contra order comprises determining whether the account associated with that first order and the particular account associated with the contra order are associated with the same holding company.

26. The method of claim 1, wherein electronically determining whether each of one or more first orders is related to the contra order comprises determining whether the account associated with that first order and the particular account associated with the contra order are associated with entities having a predetermined relationship regarding trading in the electronic market.

27. The method of claim 1, wherein electronically determining whether each of one or more first orders is related to the contra order comprises determining whether the account associated with that first order and the particular account associated with the contra order are on a predetermined list of related trading entities.

28. A method for managing electronic trading, comprising:

in an electronic market, receiving a plurality of orders including buy orders and sell orders, each order having a price;

electronically determining that the price of a first one of the plurality of orders matches or crosses the price of a second one of the plurality of orders and a third one of the plurality of orders, the first order being received from a first trading entity, the second order being received from a second trading entity, and the third order being received from a third trading entity;

electronically determining whether the second trading entity has a particular relationship with the first trading entity; and

if the second trading entity has the particular relationship with the first trading entity, without intentionally introduced delay, automatically initiating a trade between the first order and the second order; and

if the second trading entity does not have the particular relationship with the first trading entity, without intentionally introduced delay, automatically initiating a trade between the first order and the third order.

29. The method of claim 28, further comprising placing each received order into an associated order stack, including placing the second order and the third order in a particular order stack such that the third order is positioned ahead of the second order in the particular order stack.

30. The method of claim 29, wherein the third order is positioned ahead of the second order according to time priority in the particular order stack.

31. The method of claim 28, wherein:

automatically initiating a trade between the first order and the second order without intentionally introduced delay comprises automatically initiating a trade between the first order and the second order without waiting for input that may influence the automatic initiation of the trade between the first order and the second order; and

automatically initiating a trade between the first order and the third order without intentionally introduced delay comprises automatically initiating a trade between the first order and the third order without waiting for input that may influence the automatic initiation of the trade between the first order and the third order.

32. The method of claim 28, wherein electronically determining whether the second trading entity has the particular relationship with the first trading entity comprises determining whether the second trading entity and the first trading entity are associated with the same company.

33. The method of claim 28, wherein electronically determining whether the second trading entity has the particular relationship with the first trading entity comprises determining whether the second trading entity and the first trading entity are associated with the same legal entity.

34. The method of claim 28, wherein electronically determining whether the second trading entity has the particular relationship with the first trading entity comprises determining whether the second trading entity and the first trading entity are associated with entities associated with the same holding company.

35. The method of claim 28, wherein electronically determining whether the second trading entity has the particular relationship with the first trading entity comprises determining whether the second trading entity and the first trading entity are associated with entities having a predetermined relationship regarding trading in the electronic market.

36. The method of claim 28, wherein electronically determining whether the second trading entity has the particular relationship with the first trading entity comprises determining whether the second trading entity and the first trading entity are on a predetermined list of related trading entities.

37. The method of claim 28, wherein:

the third order is positioned ahead of the second order in a order stack;

the first order has a first order size and the second order has a second order size; and

the method comprises, if the second trading entity has the particular relationship with the first trading entity;

if the first order size is less than or equal to the second order size, automatically initiating a trade of the first order size between the first order and the second order;

if the first order size is greater than the second order size, automatically initiating a first trade between the second order and a first portion of the first order equal to the second order size, and automatically initiating a second trade between the third order and a remaining portion of the first order.

38. The method of claim 28, wherein:

the third order is positioned ahead of the second order in a order stack;

the second order is positioned ahead of a fourth one of the plurality of orders, the fourth order being received from a fourth trading entity;

the first order has a first order size, the second order has a second order size, and the fourth order has a fourth order size; and

the method comprises;

electronically determining that the price of the first order matches or crosses the price of a fourth order;

electronically determining whether the fourth trading entity has a particular relationship with the first trading entity; and

if both the second trading entity and the fourth trading entity have the particular relationship with the first trading entity;

if the first order size is less than or equal to the second order size, automatically initiating a trade of the first order size between the first order and the second order;

if the first order size is greater than the second order size, automatically initiating a first trade between the second order and a first portion of the first order equal to the second order size, automatically initiating a second trade between the fourth order and a remaining portion of the first order; and

if the first order size is greater than the sum of the second order size and fourth order size, automatically initiating a first trade between the second order and a first portion of the first order equal to the second order size, automatically initiating a second trade between the fourth order and a second portion of the first order equal to the fourth order size, and automatically initiating a third trade between the third order and a remaining portion of the first order.

39. The method of claim 28, wherein:

the third order is positioned ahead of the second order in a order stack;

the second order has a second order size and the third order has a third order size; and

the method comprises;

if the second trading entity does not have the particular relationship with the first trading entity, automatically determining without intentionally introduced delay, based at least on the second order size and the third order size, a first pro rata portion of the first order to be traded with the second order and a second pro rata portion of the first order to be traded with the third order, and automatically initiating a first trade between the second order and the first pro rata portion of the first order and a second trade between the third order and the second pro rata portion of the first order; and

if the second trading entity has the particular relationship with the first trading entity, automatically determining without intentionally introduced delay, based at least on the second order size and the third order size, an increased pro rata portion of the first order to be traded with the second order and a decreased pro rata portion of the first order to be traded with the third order, and automatically initiating a first trade between the second order and the increased pro rata portion of the first order and a second trade between the third order and the decreased pro rata portion of the first order, wherein the increased pro rata portion of the first order is greater than the first pro rata portion of the first order, and the decreased pro rata portion of the first order is smaller than the second pro rata portion of the first order.

40. A method for managing electronic trading, comprising:

in an electronic market, receiving a first order;

during an auction for trading with the first order, receiving at least a first final auction entry and a second final auction entry;

electronically determining that the first final auction entry is related to the first order and the second final auction entry is not related to the first order;

based at least on the relative prices of the at least first and second final auction entries and the determination that first final auction entry is related to the first order, determining the first final auction entry to be executed first; and

executing a trade between the first order and the first final auction entry.

41. The method of claim 40, wherein determining the first final auction entry to be executed first comprises determining the first final auction entry to be executed first only if the price of the first auction entry is at the best auction price available for the first order.

42. The method of claim 40, wherein:

the first order is received from a first account;

the first final auction entry is received from a second account;

the second final auction entry is received from a third account; and

determining that the first final auction entry is related to the first order and the second final auction entry is not related to the first order comprises determining that the second account is related to the first account and the third account is not related to the first account.

43. The method of claim 40, wherein:

determining the first final auction entry to be executed first comprises determining the first final auction entry to be executed first and the second final auction entry to be executed second; and

the method further comprises, after executing a trade between the first order and the first final auction entry, executing a trade between the first order and the second final auction entry.

44. The method of claim 40, wherein determining the first final auction entry to be executed first comprises determining only the first final auction entry to be executed for the first order.

45. The method of claim 40, wherein electronically determining that the second account is related to the first account comprises determining that the second account and the first account are associated with the same company.

46. The method of claim 40, wherein electronically determining that the second account is related to the first account comprises determining that the second account and the first account are associated with the same legal entity.

47. The method of claim 40, wherein electronically determining that the second account is related to the first account comprises determining that the second account and the first account are associated with the same holding company.

48. The method of claim 40, wherein electronically determining that the second account is related to the first account comprises determining that the second account and the first account have a predetermined relationship in the electronic market.

49. The method of claim 40, wherein electronically determining that the second account is related to the first account comprises determining that the second account is on a predetermined list of entities related to the first account.

50. A method for managing electronic trading, comprising:

electronically receiving a plurality of orders, each order associated with an account and having a price;

electronically routing each of the received orders to one of multiple electronic markets;

electronically receiving a contra order associated with a particular account;

electronically determining, for one or more of the routed orders, whether that routed order is related to the contra order by determining whether the account associated with that routed order has a relationship with the particular account associated with the contra order;

if at least one routed order having an appropriate price is determined to be related to the contra order, communicating a message to the electronic market to which a particular related first order was routed to cancel at least a portion of the particular related order;

causing a trade between the contra order and the cancelled portion of the related order; and

if no routed order having an appropriate price is determined to be related to the contra order, routing the contra order to one of the multiple electronic markets.

51. The method of claim 50, wherein routing each of the received orders to one of the multiple electronic markets comprises routing based at least on current price information associated with one or more of the multiple electronic markets.

52. The method of claim 50, wherein routing each of the received orders to one of the multiple electronic markets comprises routing at least one order to a first electronic market and routing at least one order to a second electronic market.

53. The method of claim 50, wherein:

electronically routing each of the received orders to one of the multiple electronic markets comprises electronically routing each of at least one buy order to one of the multiple electronic markets, each buy order having a bid price; and

electronically receiving a contra order comprises electronically receiving a sell order having an offer price of lower or equal value than the bid price of one or more of the routed buy orders.

54. The method of claim 50, wherein:

electronically routing each of the received orders to one of the multiple electronic markets comprises electronically routing each of at least one sell order to one of the multiple electronic markets, each sell order having an offer price; and

electronically receiving a contra order comprises electronically receiving a buy order having a bid price of higher or equal value than the offer price of one or more of the routed sell orders.

55. The method of claim 50, wherein:

electronically determining whether each of one or more routed orders is related to the contra order comprises;

electronically determining that a first order routed to a particular one of the multiple electronic markets and positioned in a order list is not related to the contra order;

electronically determining that a second order routed to the particular electronic market and positioned behind the first order in the order list is related to the contra order; and

the method further comprises;

in response to determining that the second order is related to the contra order, communicating a message to the particular electronic market to cancel at least a portion of the second order; and

causing a trade between the contra order and the second order.

56. The method of claim 55, comprising:

in response to determining that the first order is not related to the contra order, not communicating a message to the particular electronic market to cancel the first order; and

not causing a trade between the contra order and the first order.

57. The method of claim 55, wherein the first order is positioned ahead of the second order in the order list according to time priority.

58. The method of claim 50, wherein electronically determining whether each of one or more routed orders is related to the contra order comprises determining whether the account associated with that order and the particular account associated with the contra order are associated with the same company.

59. The method of claim 50, wherein electronically determining whether each of one or more routed orders is related to the contra order comprises determining whether the account associated with that order and the particular account associated with the contra order are associated with the same legal entity.

60. The method of claim 50, wherein electronically determining whether each of one or more routed orders is related to the contra order comprises determining whether the account associated with that order and the particular account associated with the contra order are associated with the same holding company.

61. The method of claim 50, wherein electronically determining whether each of one or more routed orders is related to the contra order comprises determining whether the account associated with that order and the particular account associated with the contra order are associated with entities having a predetermined relationship regarding trading in the electronic market.

62. The method of claim 50, wherein electronically determining whether each of one or more routed orders is related to the contra order comprises determining whether the account associated with that order and the particular account associated with the contra order are on a predetermined list of related trading entities.