TRADING SYSTEM WITH ELFS AND UMPIRES

• US 20070255642A1
• Filed: 08/31/2006
• Published: 11/01/2007
• Est. Priority Date: 04/10/2000
• Status: Active Grant

• Current Assignee: Xylon LLC (Intellectual Ventures LLC)
• Original Assignee: Stikine Technology LLC (Intellectual Ventures LLC)
• Inventors: Keith, Christopher
• Granted Patent: US 8,380,609 B2
• 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

Price setting for a security occurs by automatically engaging in a price discovery procedure before responding to a request for a current buy or sell price of the security to provide an automatically discovered price that is better than a book price. The book price is the best price in an order book including orders to buy or sell specified quantities of the security at respective prices, the lowest sell order price of the booked orders being the book sell price, the highest buy order price of the booked orders being the book buy order price. The price discovery procedure includes providing the book buy or sell price to at least one entity registered to participate in the price discovery procedure. The entity automatically provides an improved price relative to the book price based on a predetermined strategy that is determined independently of the strategies for other entities. The temporal duration of the price discovery procedure can be predetermined or based on an amount of activity occurring during the price discovery procedure.

Claims

1. A method of pricing a security, comprising:

receiving a request from a computer program entity to register for trading activity in the security,

receiving a price inquiry for the security from the computer program entity,

responding to the price inquiry with an offered price,

if the offered price does not result in a trade for the security, then maintaining the registration of the computer program entity,

providing a price improvement opportunity to the registered computer program entity based on a price inquiry received from a second computer program entity, wherein the price improvement opportunity includes providing a proposed buy or sell price to the registered computer program entity and receiving from the registered computer program entity an improved price that is higher than the proposed buy price or lower than the proposed sell price, and

in response to the price inquiry received from the second computer program entity, providing the improved price to the second computer program entity.

2. The method of claim 1 wherein the registration of the computer program entity is maintained until a deregistration notice is received from the computer program entity.

3. The method of claim 1, further comprising maintaining an order book that includes buy or sell orders for the security, the order book having a book sell price being the lowest sell price for sell orders or a book buy price being the highest buy price for buy orders,

wherein said responding to the price inquiry with an offered price comprises offering the book buy or sell price if the book buy or sell price matches a recent trade price for the security.

4. The method of claim 3 wherein if the book buy or sell price is different than the trade price, then providing the book buy or sell price to a registered computer program entity with an opportunity for the registered computer program entity to provide an improved price that is higher than the book buy price or lower than the book sell price, and

if an improved price is received, then providing the improved price as the offered price.

5. The method of claim 3, further comprising receiving a buy or sell order for the order book from the registered computer program entity.