Trading platform with automated negotiation and option crossing

• US 20090276363A1
• Filed: 05/01/2008
• Published: 11/05/2009
• Est. Priority Date: 05/01/2008
• Status: Active Grant

• Current Assignee: Trebuchet Holdings LLC (Intercontinental Exchange, Inc.)
• Original Assignee: Trebuchet Holdings LLC (Intercontinental Exchange, Inc.)
• Inventors: Mintz, Hal, Berman, Ross, Newhouse, Robert, Burros, Chet
• Granted Patent: US 10,529,019 B2
• Time in Patent Office: Days
• US Class Current: 705/80
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 50/188 Electronic negotiation

Abstract

A system and method for trading securities that include at least one options leg is provided. The system generally includes a database, handlers, a network and at least one server. The database stores user information, security information and transaction information. The handlers receive information feeds from at least one public exchange. The at least one server implements an exchange facility that is capable of exchanging information with client terminals to allow the client to initiate at least one offer to trade a security having an option leg, identifying users interested in the offer, broadcasting the offer to the interested users and conducting a defined period auction among the interested users. The system and method also automatically cross the options legs on exchanges and facilitate negotiation when the auction is not consummated.

Claims

1. A system for trading securities including at least one options leg, comprising:

a database for storing user information, security information and transaction information;

at least one handler coupled to at least one exchange for receiving information feeds from the at least one the exchange;

a network coupling the database, feed handlers and at least one server together and allowing access to the at least one server from client terminals;

wherein the at least one server is capable of exchanging information with client terminals allow the client to initiate at least one offer to trade a security having an option leg, identifying users interested in the offer, broadcasting the offer to the interested users and conducting a defined period auction among the interested users.

2. The system according to claim 1, wherein the at least one server further is capable of receiving liquidity from the interested users and consummating a trade based on the offer and received liquidity.

3. The system according to claim 2, wherein the server further is capable of receiving liquidity from at least one public exchange and consummating the trade based on the offer, received liquidity and additional liquidity from the at least one public exchange.

4. The system according to claim 3 wherein the system is capable of concluding the auction without consummating a transaction and initiating a negotiation between an initiator of the offer and at least one of the losing bidders.

5. The system according to claim 4, wherein the negotiation is between the initiator of the offer and the closest losing bidder.

6. The system according to claim 1 wherein the system is capable of concluding the auction without consummating a transaction and initiating a negotiation between an initiator of the offer and at least one of-the losing bidders.

7. The system according to claim 6, wherein the negotiation is between the initiator of the offer and the closest losing bidder.

8. The system according to claim 1, wherein auctions in a particular security are exclusive to the initiating bidder for a period of time.

9. The system according to claim 1, wherein the at least one server is capable, upon consummation of a trade, of automatically crossing the options legs on at least one public exchange.

10. The system according to claim 9, wherein the trade includes a stock component and the at least one server is capable of accounting for prices changes of the options legs resulting from crossing on public exchanges and offsetting the price from the stock component.

11. The system according to claim 1, wherein the trade comprises at least one of a tied transaction or a block option trade.

12. A method of trading a security having at least one option component, comprising:

providing a display having a show pane and an auction pane;

setting an interest criteria for trade offers having at least one option leg;

displaying incoming trade offers corresponding to the interest criteria in the show pane;

selecting to view liquidity associated with particular incoming trade offers;

prompting the user to declare liquidity associated with the incoming trade offer to allow the user to participate in an auction associated with the trade.

13. The method according to claim 12, further comprising:

providing an indication to the user of whether the user consummated a trade based on the liquidity declared.

14. The method according to claim 13, further comprising:

prompting the user to negotiate with an entity that initiated the trade offer when the trade is not consummated.

15. The method according to claim 14, further comprising:

prompting the user through an electronic interface to provide information used to negotiate with the entity; and

transmitting electronic information between the user and the entity on the trade offer; and

consummating a transaction when the user and entity agree.

16. A method for trading securities including at least one options leg, comprising:

storing user information, security information and transaction information;

receiving information feeds from the at least one the exchange and trade information from at least one client system;

exchanging messages with the client terminals;

initiating at least one offer to trade a security having an option leg based on information received from one of the client terminals;

identifying users interested in the offer;

broadcasting the offer to the interested users; and

conducting a defined period auction among the interested users.

17. The method according to claim 16, further comprising:

receiving liquidity from the interested users and consummating a trade based on the offer and received liquidity.

18. The method according to claim 17, further comprising:

receiving liquidity from at least one public exchange; and

consummating the trade based on the offer, received liquidity and additional liquidity from the at least one public exchange.

19. The method according to claim 18, further comprising:

concluding the auction without consummating a transaction; and

initiating a negotiation between an initiator of the offer and at least one of the losing bidders.

20. The method according to claim 19, wherein the negotiation is between the initiator of the offer and the closest losing bidder.

21. The method according to claim 16, wherein auctions in a particular security are exclusive to the initiating bidder for a period of time.

22. The method according to claim 16, further comprising:

automatically crossing the options legs on at least one public exchange.

23. The method according to claim 22, wherein the trade includes a stock component and further comprising:

accounting for prices changes of the options legs resulting from crossing on public exchanges and offsetting the price from the stock component.

24. The method according to claim 16, wherein the trade comprises at least one of a tied transaction or a block option trade.