HYBRID TRADING SYSTEM FOR CONCURRENTLY TRADING THROUGH BOTH ELECTRONIC AND OPEN-OUTCRY TRADING MECHANISMS

• US 20090292634A1
• Filed: 04/30/2009
• Published: 11/26/2009
• Est. Priority Date: 04/24/2003
• Status: Abandoned Application

• Current Assignee: Anthony J. Carone, Anthony Montesano, Edward T. Tilly, Eileen C. Smith, Mark A. Esposito, Stuart J. Kipnes
• Original Assignee: Anthony J. Carone, Anthony Montesano, Edward T. Tilly, Eileen C. Smith, Mark A. Esposito, Stuart J. Kipnes
• Inventors: Tilly, Edward T., Smith, Eileen C., Montesano, Anthony, Kipnes, Stuart J., Esposito, Mark A., Carone, Anthony J.
• Application Number:
  US12/433,498
• Publication Number:
  US 20090292634A1
• Time in Patent Office: Days
• US Class Current: 705/37
• 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 40/04 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 of allocating orders in an exchange configured for trading by a combination of electronic and open-outcry trading mechanisms is provided. One method includes permitting multiple quotes to be disseminated to the market, and providing market making rights of varying degrees to entities having a physical presence on the floor of the exchange and entities remotely located away from the trading floor. The system includes a trade engine configured for receiving orders from market makers on and away from the trading floor. The system also includes executable instructions for allocating to designated primary market makers a portion of an incoming order remaining after first trading against public customer orders.

Claims

1-17. -17. (canceled)

18. An automated exchange system for the purchase or sale of securities or derivatives in an exchange configured for trading securities or derivatives comprising:

an electronic trade engine configured for receiving incoming orders generated by an market participant physically present at an open-outcry trading floor of an exchange or at a location remote to the open-outcry trading floor of the exchange;

an electronic book configured for storing the incoming orders received by the electronic trade engine;

a database comprising an allocation algorithm, the database in communication with the electronic trade engine; and

a trade processor in communication with the database for analyzing and executing orders according to an allocation algorithm selected from the database, the trade processor comprising;

a first set of instructions for determining a total number of market participants physically present at the open-outcry trading floor of an exchange and at a location remote to the open-outcry trading floor of the exchange at a matching price of an incoming electronic order;

a second set of instructions for determining a collective allocation percentage for market participants based on the total number of market participants located at the open-outcry trading floor of the exchange, and at locations remote to the open-outcry trading floor, at the matching price according to the relation;

$\mathrm{allocation}<br><br><br><br>\mathrm{percentage}=\hspace{1em}<br><br>\left[\frac{\frac{1}{\mathrm{number}<br><br><br><br>\mathrm{of}<br><br><br><br>\mathrm{participants}}+\frac{\mathrm{participant}<br><br><br><br>\mathrm{quote}<br><br><br><br>\mathrm{size}}{\sum <br><br>\mathrm{participant}<br><br><br><br>\mathrm{quote}<br><br><br><br>\mathrm{sizes}}}{2}\right]$

and

a third set of instructions for allocating, among the market participants located at the open-outcry trading floor of the exchange, and at locations remote to the open-outcry trading floor, a portion of the incoming electronic order remaining after execution against any public customer orders based on the collective allocation percentage.

19. The automated exchange system of claim 18, wherein the third set of instructions further comprises instructions for multiplying the portion by the collective allocation percentage and then dividing a result by a total number of designated primary market makers.

20. The automated exchange system according to claim 18, wherein the third set of instructions further comprises multiplying the remainder allocated to a remote market maker by a fixed percentage.

21. The method according to claim 19, wherein the remainder is further divided equally among remote market makers at the price matching the incoming electronic order.