INTRADAY RISK MANAGEMENT DATA CLOUD COMPUTING SYSTEM CAPABLE OF CONTROLLING EXECUTION OF ORDERS

• US 20110166982A1
• Filed: 08/31/2010
• Published: 07/07/2011
• Est. Priority Date: 10/14/2003
• Status: Active Grant

• Current Assignee: FTEN, Inc. (Nasdaq, Inc.)
• Original Assignee: FTEN, Inc. (Nasdaq, Inc.)
• Inventors: Cole, Lee, LaFever, Malcolm Gary, Kittelsen, Douglas Guy, Myerson, Ted Nathan
• Granted Patent: US 8,788,396 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 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

In at least one embodiment, a method and system associated with financial articles of trade may include comparing relevant portions of data pertaining to an attempted transaction, wherein the transaction may pertain to one in which an entity is financially liable but unaware. At least one embodiment includes monitoring market transaction activity data to determine when a trading entity has exceeded an aggregated limit, such as one or more trading sub-limits corresponding to one or more custodial prime brokers facilitating trading for the trading entity. At least one embodiment includes a pre-trade gateway to determine if an order violates a pre-trade risk based on information collected by a front-end analyzer. Possible actions include, but are not limited to, placing a null order, terminating a connection associated with the order, modifying the order so as not to violate a pre-trade risk check, and/or notifications to one or more entities.

Claims

1. A method for monitoring market transaction activity data, comprising:

collecting real-time data from a plurality of liquidity destinations trading at least one financial article of trade, wherein the real-time data comprises disparate data corresponding to associated liquidity destinations;

defining a condition of a trading market comprising at least one of submitted and executed transactions of financial articles of trade over said plurality of liquidity destinations;

associating said condition that is defined with an entity;

identifying an event in said trading market from said portion of real-time data that is normalized in which the event matches said condition;

terminating at least one communication session between said entity and a corresponding liquidity destination; and

initiating a process at said corresponding liquidity destination that cancels at least one pending transaction submitted by said entity.

2. The method of claim 1, wherein said terminating at least one communication session comprises:

physically de-coupling a connection between said entity and said corresponding liquidity destination, wherein said connection enables said communication session.

3. The method of claim 1, wherein said terminating at least one communication session comprises:

logically de-coupling a connection between said entity and said corresponding liquidity destination, wherein said connection enables said communication session.

4. The method of claim 1, wherein said terminating at least one communication session comprises:

invoking a session termination over at least one communication session.

5. The method of claim 4, wherein said session termination comprises a TCP teardown.

6. The method of claim 1, wherein said terminating at least one communication session comprises:

terminating a plurality of communication sessions between said entity and said plurality of liquidity destinations.

7. The method of claim 6, wherein said terminating all communication session comprises:

at least one of physically or logically de-coupling a plurality of connections between said entity and said plurality of liquidity destinations, wherein said plurality of connections enables said plurality of communication sessions.

8. The method of claim 7, further comprising:

determining said plurality of connections between said entity and said plurality of liquidity destinations.

9. The method of claim 6, wherein said terminating a plurality of communication sessions comprises:

terminating all communication sessions between said entity and said plurality of liquidity destinations.

10. The method of claim 1, wherein said terminating at least one communication session further comprises:

causing a physical de-coupling of a connection between said entity and said corresponding liquidity destination.

11. The method of claim 1, wherein said terminating at least one communication session further comprises:

sending an instruction to a third party component to initiate an action altering said communication session.

12. The method of claim 1, wherein said initiating a process comprises:

forcing a cancel-on-disconnect process at said corresponding liquidity destination.

13. The method of claim 1, wherein said condition is based on transactions of financial articles of trade related to said entity.

14. The method of claim 1, wherein said condition includes transactions of financial articles of trade not related to said entity.

15. The method of claim 6, further comprising:

determining from said real-time data canceled orders related to said entity over said plurality of liquidity destinations;

determining an open order base of said entity based on said real-time data;

comparing said open order base to said canceled orders; and

determining that orders for transactions of financial articles of trade are not submitted through said plurality of communication sessions when said canceled orders do not correspond to said open order base.

16. The method of claim 1, further comprising:

restoring said at least one communication session to said corresponding liquidity destination through a pre-trade gateway performing pre-trade risk analysis.

17. A method for modifying market activity, comprising:

associating a defined condition of a trading market with an entity;

identifying an event in said trading market matching said defined condition; and

in response to said event, modifying an order of the entity submitted over a communication session to a liquidity destination.

18. The method of claim 17, wherein at least one of said associating, said identifying and said modifying are performed using real-time data collected from a plurality of liquidity destinations trading at least one financial article of trade.

19. The method of claim 17, wherein said modifying an order further comprises:

terminating said communication session to invoke a process at said liquidity destination that cancels said order.

20. A method for monitoring market transaction activity data, comprising:

accessing real-time data from a plurality of sources trading at least one financial article of trade with a plurality of liquidity destinations;

associating a condition of a trading market with an entity;

identifying an event in said trading market matching said condition from said real-time data;

terminating at least one communication session between said entity and a corresponding liquidity destination; and

initiating a process at said corresponding liquidity destination that cancels pending transactions from said entity.

21. The method of claim 20, wherein said event is based on transactions of financial articles of trade related to said entity.

22. The method of claim 20, wherein said event is based on transactions of financial articles of trade not related to said entity.

23. A system for monitoring market transaction activity data, comprising:

a communication session between an entity and a liquidity destination, wherein said communication session facilitates trading of at least one financial article of trade;

a connection between said entity and said liquidity destination;

a gateway located on said connection;

a collector for collection of real-time data including transactions of financial articles of trade;

an event identifier for identifying an event matching a defined condition in a trading market comprising one or both of submitted and executed transactions of financial articles of trade over a plurality of liquidity destinations from said real-time data, wherein said condition is associated with said entity;

a controller for terminating said connection using said switch when said event is identified.

24. The system of claim 23, wherein said gateway comprises a logical switch.

25. The system of claim 23, wherein said gateway comprises a physical switch.

26. The system of claim 23, wherein said collector collects real-time data from said plurality of liquidity destinations, wherein said real-time data comprises disparate data corresponding to associated liquidity destinations.

27. The system of claim 23, wherein said collector collects real-time data from a plurality of sources trading said at least one financial article of trade over said plurality of liquidity destinations.

28. A method for monitoring data, comprising:

forming a connection between a trading entity and a liquidity destination, wherein said connection facilitates trading of an order of a financial article of trade;

delivering said order from said trading entity over said connection;

previewing said order at a pre-trade gateway before delivery of said order to said liquidity destination;

delivering information related to said order to a front-end analyzer which is capable of determining a position of an entity based on all orders collected by said front-end analyzer;

defining a pre-trade risk;

determining if said order violates said pre-trade risk based on information collected by said front-end analyzer;

creating a non-actionable trading message based on said order when said pre-trade risk is violated; and

delivering said null order to said liquidity destination.

29. The method of claim 28, wherein said generating a null order comprises:

modifying a header of a message comprising said order identifying said message as a null order.

30. The method of claim 28, wherein said creating a non-actionable trading message comprises:

appending information to a message comprising said order rendering said message as being non-actionable.

31. The method of claim 28, wherein said creating a non-actionable trading message comprises:

deleting information from a message comprising said order rendering said message as being non-actionable.

32. A system for monitoring market transaction activity data, comprising:

a connection between a trading entity and a liquidity destination, wherein said connection facilitates trading of an order of a financial article of trade;

a pre-trade gateway located on said connection;

a front-end analyzer for collection of real-time pre-trade information including pending transactions of financial articles of trade collected before or contemporaneous with delivery to said liquidity destination;

wherein said pre-trade gateway performs risk management to determine whether said order violates a pre-trade risk; and

wherein said pre-trade gateway generates a null order based on said order when said pre-trade risk is violated.

33. A system for monitoring market transaction activity data, comprising:

a computer for collection of pre-trade information including pending transactions of financial articles of trade collected before delivery of the pending transactions to a liquidity destination, the computer generating at least one of a null order or an order termination action when a pre-trade risk is violated.

34. A system for monitoring market transaction activity data, comprising:

a plurality of liquidity destination trading at least one financial article of trade;

a centralized hub for receiving real time data related to market conditions; and

a limit collector and analyzer for tracking trading activity for a particular trading entity, said limit collector and analyzer comprising a comparator for determining when said trading activity exceeds an aggregate trading limit based on one or more trading sub-limits assigned by one or more prime brokers for that trading entity.

35. The system of claim 34, further comprising:

a notification engine for providing notification of when said trading activity exceeds an aggregate trading limit based on one or more trading sub-limits assigned by one or more prime brokers for that trading entity.

36. A method for monitoring market transaction activity data, comprising:

collecting at a centralized hub real time data related to conditions of a trading market from one or more liquidity destinations trading at least one financial article of trade;

parsing out trading activity for a particular trading entity; and

determining when said trading activity exceeds an aggregate trading limit based on one or more trading sub-limits assigned by one or more prime brokers for that trading entity.

37. The method of claim 36 further comprising:

providing notification of when said trading activity exceeds an aggregate trading limit based on one or more trading sub-limits assigned by one or more prime brokers for that trading entity.

38. The method of claim 36, wherein said determining further comprises:

determining when said trading activity exceeds a trading sub-limit of a prime broker.

39. The method of claim 36, further comprising:

parsing out a subset of trading activity for that trading entity that includes trades backed by assets held by a particular prime broker, wherein said prime broker has assigned a trading sub-limit for that trading entity; and

determining when said subset of trading activity exceeds said trading sub-limit of said prime broker for said trading entity.

40. The method of claim 36, further comprising:

normalizing at least a portion of said real time data that is collected into a standard form; and

storing said real time data.

41. A method for monitoring market transaction activity data, comprising:

collecting at a centralized hub real time data related to conditions of a trading market from one or more liquidity destinations trading at least one financial article of trade;

normalizing at least a portion of said real time data that is collected into a standard form;

storing said real time data that is normalized;

parsing out trading activity for a particular trading entity;

parsing out a subset of trading activity for that trading entity that includes trades backed by assets held by a particular prime broker, wherein said prime broker has assigned a trading sub-limit for that trading entity; and

determining when said subset of trading activity exceeds said trading sub-limit of said prime broker for said trading entity.

42. A method of processing financial articles of trade, comprising:

collecting real time data from a plurality of liquidity destinations trading at least one financial article of trade, said real time data including information on one or both submitted and completed transactions of financial articles of trade, wherein said real time data comprises disparate data of varying formats corresponding to associated liquidity destinations;

from said real time data, identifying a transaction which an entity is financially liable as one of a chain of parties involved in affecting said identified transaction, wherein said entity was previously unaware of its submission to one of said plurality of liquidity destinations because another party in said chain of parties submitted said identified transaction to one of said plurality of liquidity destinations;

determining that the transaction violates a pre-trade risk; and

cancelling the transaction.

43. The method of claim 42, wherein said cancelling includes using a pre-trade gateway to generate a null order associated with the transaction when the pre-trade risk is violated.

44. The method of claim 42, wherein said cancelling includes terminating a connection associated with the transaction.

45. A method for monitoring data, comprising:

forming a connection between a trading entity and a liquidity destination, wherein said connection facilitates trading of an order of a financial article of trade;

delivering said order from said trading entity over said connection;

previewing said order at a pre-trade gateway before delivery of said order to said liquidity destination;

delivering information related to said order to a front-end analyzer which is capable of determining a position of said trading entity based on all orders collected by said front-end analyzer;

defining a pre-trade risk;

determining if said order violates said pre-trade risk based on information collected by said front-end analyzer;

modifying said order to generate a modified order so that said pre-trade risk is not violated by said modified order; and

passing said modified order to said liquidity destination.

46. A system for monitoring market transaction activity data, comprising:

a connection between a trading entity and a liquidity destination, wherein said connection facilitates trading of an order of a financial article of trade;

a pre-trade gateway located on said connection;

a front-end analyzer for collection of real-time pre-trade information including pending transactions of financial articles of trade collected before delivery to said liquidity destination;

wherein said pre-trade gateway performs risk management to determine whether said order violates a pre-trade risk; and

wherein said pre-trade gateway modifies said order to generate a modified order so that said pre-trade risk is not violated by said modified order when said pre-trade risk is violated.

47. A method for monitoring data, comprising:

previewing an order submitted by trading entity to a liquidity destination over a connection that facilitates trading of orders of financial articles of trade before delivery of said order to said liquidity destination;

defining a pre-trade risk;

determining if said order violates said pre-trade risk;

modifying said order to generate a modified order so that said pre-trade risk is not violated by said modified order; and

passing said modified order to said liquidity destination.

48. A method for monitoring market transaction activity data, comprising:

receiving from a liquidity destination one or more confirmations of one or more transactions of financial articles of trade submitted to said liquidity destination from a trading entity over a period;

receiving from said trading entity one or more requests comprising copies of transactions of financial articles of trade submitted to said liquidity destination by said trading entity over said period;

comparing said one or more confirmations to said one or more requests; and

altering behavior at said liquidity destination with regards to said trading entity when a discrepancy occurs between said one or more confirmations and said one or more requests.

49. The method of claim 48, wherein said comparing said one or more confirmations comprises:

comparing an aggregate total of confirmations over said period to an aggregate total of requests.

50. The method of claim 48, wherein said comparing said one or confirmations comprises:

comparing drop-copy information in said one or more confirmations with reverse drop-copy information in said one or more requests.

51. The method of claim 48, further comprising:

submitting said one or more transactions of financial articles of trade directly to said liquidity destination by said trading entity.

52. The method of claim 48, wherein said altering behavior at said liquidity destination further comprises:

canceling transactions of financial articles of trade of said trading entity pending at said liquidity destination.

53. The method of claim 48, wherein said altering behavior at said liquidity destination further comprises:

initiating a cancel on disconnect process at said liquidity destination for transactions associated with said trading entity.

54. The method of claim 48, wherein said altering behavior at said liquidity destination further comprises:

leveraging command and control capability to initiate an action by a third party to alter behavior at said liquidity destination.

55. The method of claim 48, wherein said transactions of financial articles of trade comprise orders.

56. The method of claim 48, wherein said transactions of financial articles of trade comprises executions of orders.

57. The method of claim 48, further comprising:

receiving a risk parameter from said liquidity destination related to said trading entity;

determining if said one or more confirmations and one or more requests are in compliance with said risk parameter; and

altering behavior at said liquidity destination with regards to said trading entity when said risk parameter is violated.

58. The method of claim 48, further comprising:

receiving a risk parameter from said liquidity destination related to said trading entity;

determining if a submitted transaction is in compliance with said risk parameter; and

altering behavior at said liquidity destination with regards to said trading entity when said risk parameter is violated.

59. The method of claim 48, further comprising:

determining a distributed position of said trading entity with regards to said liquidity destination;

receiving a risk parameter from said liquidity destination related to said trading entity;

determining if said distributed position of said trading entity is in compliance with said risk parameter; and

altering behavior at said liquidity destination with regards to said trading entity when said risk parameter is violated.

60. The method of claim 59, further comprising:

receiving a second distributed position of said trading entity with regards to a second liquidity destination;

determining a market position of said trading entity with regards to one or more liquidity destinations;

determining if said market position of said trading entity is in compliance with said risk parameter; and

altering behavior at said liquidity destination with regards to said trading entity when said risk parameter is violated.

61. A system for monitoring market transaction activity data, comprising:

an order collector for receiving from a liquidity destination one or more confirmations of one or more transactions of financial articles of trade submitted to said liquidity destination from a trading entity over a period;

a request collector for receiving from said trading entity one or more requests comprising copies of transactions of financial articles of trade submitted to said liquidity destination by said trading entity over said period;

an evaluator coupled to said order collector and said request collector for comparing said one or more confirmations to said one or more requests, wherein behavior at said liquidity destination is altered with regards to said trading entity when a discrepancy occurs between said one or more confirmations and said one or more requests.

62. The system of claim 61, further comprising:

a risk parameter related to said trading entity;

wherein said evaluator determines if said one or more confirmations and one or more requests are in compliance with said risk parameter, and is capable of initiating an action that alters behavior at said liquidity destination with regards to said trading entity when said risk parameter is violated.

63. The system of claim 61, further comprising:

a risk parameter related to said trading entity;

wherein said evaluator determines if a submitted transaction is in compliance with said risk parameter, and is capable of initiating an action that alters behavior at said liquidity destination with regards to said trading entity when said risk parameter is violated.

64. The system of claim 61, further comprising:

a centralized system coupled to said evaluator providing a market view of said trading entity;

a risk parameter related to said trading entity;

wherein behavior at said liquidity destination is altered with regards to said trading entity when said market view violates said risk parameter.

65. The system of claim 61, further comprising:

a second order collector for receiving from a second liquidity destination one or more confirmations of one or more transactions of financial articles of trade submitted to said second liquidity destination from said trading entity over a period;

a second request collector for receiving from said trading entity one or more requests comprising copies of transactions of financial articles of trade submitted to said second liquidity destination by said trading entity over said period;

a second evaluator coupled to said second order collector and said second request collector for comparing said one or more confirmations to said one or more requests related to said second liquidity destination, wherein behavior at said liquidity destination is altered with regards to said trading entity when a discrepancy occurs between one or more confirmations and one or more requests related to said second liquidity destination.

66. The system of claim 65, wherein said behavior at said liquidity destination is altered with regards to said trading entity when a discrepancy occurs between one or more confirmations and one or more requests related to said first and second liquidity destination.