System and method for trading financial instruments using multiple accounts

• US 20060235785A1
• Filed: 04/13/2005
• Published: 10/19/2006
• Est. Priority Date: 04/13/2005
• Status: Active Grant

• Current Assignee: Interactive Brokers LLC (Interactive Brokers Group, Inc.)
• Original Assignee: Interactive Brokers LLC (Interactive Brokers Group, Inc.)
• Inventors: Peterffy, Thomas P., Chait, Jonathan
• Granted Patent: US 7,827,092 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• 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 system and method for trading financial instruments from a master account having a plurality of sub-accounts. A user defines an account group, which includes a plurality of sub-accounts, and the user selects an allocation model for the account group from a group of allocation models. After executing an order of financial instruments for the account group, the order is allocated to the sub-accounts using the allocation model. Prior to executing the order, a financial capability of the account group to execute the order using a primary allocation model is evaluated, and a secondary allocation model is used if the order cannot be allocated using the primary allocation model. The financial capability of the account group may be evaluated in real-time, and a partially executed order may also be allocated to the sub-accounts in real-time. Upon the execution of the order being completed, the order is reallocated to the sub-accounts using the selected allocation model.

Claims

1. A computer-implemented method for trading financial instruments from a master account having a plurality of sub-accounts, comprising the steps of:

defining an account group, the account group including a plurality of the sub-accounts;

selecting an allocation model from a plurality of allocation models;

executing an order of financial instruments for the account group; and

allocating the order to the sub-accounts using the allocation model after the order has been executed.

2. The method for trading financial instruments according to claim 1, further comprising

associating a first allocation model to the account group, the first allocation model having a first duration;

associating a second allocation model to the account group, the second allocation model having a second duration;

comparing the first duration of the first allocation model to the second duration of the second allocation model; and

selecting the allocation model to be applied to the order using the allocation model having the shortest duration.

3. The method for trading financial instruments according to claim 1, further comprising

prior to executing the order, evaluating a financial capability of the account group to execute the order using the selected allocation model.

4. The method for trading financial instruments according to claim 3, wherein the individual financial capability of each sub-account in the account group is evaluated using the selected allocation model.

5. The method for trading financial instruments according to claim 3, wherein the financial capability of the entire account group is evaluated using the selected allocation mode.

6. The method for trading financial instruments according to claim 3, further comprising

associating a primary allocation model to the account group;

and

associating a secondary allocation model to the account group, wherein the secondary allocation model is selected if the order cannot be allocated using the primary allocation model.

7. The method for trading financial instruments according to claim 3, wherein the financial capability of the account group is evaluated in real-time.

8. The method for trading financial instruments according to claim 1, wherein a partially executed order is allocated to the sub-accounts in real-time.

9. The method for trading financial instruments according to claim 8, wherein upon the execution of the order being completed, the order is reallocated to the sub-accounts using the selected allocation model.

10. The method for trading financial instruments according to claim 1, wherein the allocation model is selected from the group consisting of:

equal quantity weighted, net liquidation weighted, available equity weighted, percentage of order, ratio of order, and percentage of existing position.

11. A system for trading financial instruments from a master account having a plurality of sub-accounts, comprising:

a server connectable to a client terminal, the server being configured to

define an account group, the account group including a plurality of the sub-accounts,

select an allocation model from a plurality of allocation models,

execute an order of financial instruments for the account group, and

allocate the order to the sub-accounts using the allocation model after the order has been executed.

12. The system for trading financial instruments according to claim 11, wherein the server being further configured to

associate a first allocation model to the account group, the first allocation model having a first duration;

associate a second allocation model to the account group, the second allocation model having a second duration;

compare the first duration of the first allocation model to the second duration of the second allocation model; and

select the allocation model to be applied to the order using the allocation model having the shortest duration.

13. The system for trading financial instruments according to claim 11, wherein the server being further configured to

prior to executing the order, evaluating a financial capability of the account group to execute the order using the selected allocation model.

14. The system for trading financial instruments according to claim 13, wherein the individual financial capability of each sub-account in the account group is evaluated using the selected allocation model.

15. The system for trading financial instruments according to claim 13, wherein the financial capability of the entire account group is evaluated using the selected allocation mode.

16. The system for trading financial instruments according to claim 13, wherein the server being further configured to

associate a primary allocation model to the account group;

and

associate a secondary allocation model to the account group, wherein the secondary allocation model is selected if the order cannot be allocated using the primary allocation model.

17. The system for trading financial instruments according to claim 13, wherein the financial capability of the account group is evaluated in real-time.

18. The system for trading financial instruments according to claim 11, wherein a partially executed order is allocated to the sub-accounts in real-time.

19. The system for trading financial instruments according to claim 18, wherein upon the execution of the order being completed, the order is reallocated to the sub-accounts using the selected allocation model.

20. The system for trading financial instruments according to claim 11, wherein the allocation model is selected from the group consisting of:

equal quantity weighted, net liquidation weighted, available equity weighted, percentage of order, ratio of order, and percentage of existing position.

21. A machine-readable medium having stored thereon instructions that, when executed by a computer at a server, controls the computer to:

a server connectable to a client terminal, the server being configured to

define an account group, the account group including a plurality of sub-accounts,

select an allocation model from a plurality of allocation models,

execute an order of financial instruments for the account group, and

allocate the order to the sub-accounts using the allocation model after the order has been executed.

22. The machine-readable medium according to claim 21, wherein the server being further configured to

associate a first allocation model to the account group, the first allocation model having a first duration;

associate a second allocation model to the account group, the second allocation model having a second duration;

compare the first duration of the first allocation model to the second duration of the second allocation model; and

select the allocation model to be applied to the order using the allocation model having the shortest duration.

23. The machine-readable medium according to claim 21, wherein the server being further configured to

prior to executing the order, evaluating a financial capability of the account group to execute the order using the selected allocation model.

24. The machine-readable medium according to claim 23, wherein the individual financial capability of each sub-account in the account group is evaluated using the selected allocation model.

25. The machine-readable medium according to claim 23, wherein the financial capability of the entire account group is evaluated using the selected allocation mode.

26. The machine-readable medium according to claim 23, wherein the server being further configured to

associate a primary allocation model to the account group;

and

associate a secondary allocation model to the account group, wherein the secondary allocation model is selected if the order cannot be allocated using the primary allocation model.

27. The system machine-readable medium according to claim 23, wherein the financial capability of the account group is evaluated in real-time.

28. The system machine-readable medium according to claim 21, wherein a partially executed order is allocated to the sub-accounts in real-time.

29. The machine-readable medium according to claim 28, wherein upon the execution of the order being completed, the order is reallocated to the sub-accounts using the selected allocation model.

30. The machine-readable medium according to claim 21, wherein the allocation model is selected from the group consisting of:

equal quantity weighted, net liquidation weighted, available equity weighted, percentage of order, ratio of order, and percentage of existing position.