HYBRID TRADING SYSTEM FOR CONCURRENTLY TRADING COMBINED ORDERS FOR FINANCIAL INSTRUMENTS THROUGH BOTH ELECTRONIC AND OPEN-OUTCRY TRADING MECHANISMS

• US 20110178913A1
• Filed: 10/21/2010
• Published: 07/21/2011
• Est. Priority Date: 03/02/2007
• Status: Active Grant

• Current Assignee: Cboe Exchange, Inc. (Cboe Global Markets, Inc.)
• Original Assignee: Chicago Board Options Exchange Incorporated (Cboe Global Markets, Inc.)
• Inventors: Smith, Eileen C.
• Granted Patent: US 8,175,958 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A system and method of trading combined orders in an exchange configured for trading by a combination of electronic and open-outcry trading mechanisms is provided. One method includes receiving an incoming order having a first order component and a second order component at an electronic trade engine and routing the first and second order components to a first electronic database. The first and second order components are matched and executed against order components maintained in the first and second electronic databases, respectively. Any unexecuted first and second order components are placed in an electronic book according to a predetermined program if the first or second order component cannot be completely matched against any order components maintained in one of the first or second electronic databases. The system includes a trade engine configured for receiving combined orders from market makers.

Claims

1-15. -15. (canceled)

16. A computerized method for processing electronic orders, the method comprising the steps of:

accessing, by a computer, a BUY order and a SELL order for a financial product, wherein the BUY order and the SELL order each have a size and price, the size of the SELL order is greater than or equal to the size of the BUY order, and the price of the SELL order is less than or equal to the price of the BUY order;

determining, by a computer, that one or more away market SELL orders, for the financial product, exist that have an away market price that is less than the price of the SELL order;

creating, by a computer, a first electronic order, wherein the first electronic order is an order to buy a first quantity of the financial product, wherein the first quantity is less than the size of the BUY order;

transmitting, by a computer, the first electronic order to an away market for execution against an away market SELL order;

creating, by a computer, a second electronic order, wherein the second electronic order is an order to buy a second quantity of the financial product, wherein the second quantity is calculated by subtracting the first quantity from the size of the BUY order;

creating, by a computer, a third electronic order, wherein the third electronic order is an order to sell a third quantity of the financial product, wherein the third quantity is equal to or less than the size of the SELL order; and

transmitting, by a computer, the second electronic order and the third electronic order to a market for execution.

17. A computerized method for processing electronic orders, the method comprising the steps of:

accessing, by a computer, a BUY order and a SELL order for a financial product, wherein the BUY order and the SELL order each have a size and price, the size of the BUY order is greater than or equal to the size of the SELL order, and the price of the BUY order is greater than or equal to the price of the SELL order;

determining, by a computer, that one or more away market BUY orders, for the financial product, exist that have an away market price that is greater than the price of the BUY order;

creating, by a computer, a first electronic order, wherein the first electronic order is an order to sell a first quantity of the financial product, wherein the first quantity is less than the size of the SELL order;

transmitting, by a computer, the first electronic order to an away market for execution against an away market BUY order;

creating, by a computer, a second electronic order, wherein the second electronic order is an order to sell a second quantity of the financial product, wherein the second quantity is calculated by subtracting the first quantity from the size of the SELL order;

creating, by a computer, a third electronic order, wherein the third electronic order is an order to buy a third quantity of the financial product, wherein the third quantity is equal to or less than the size of the BUY order; and

transmitting, by a computer, the second electronic order and the third electronic order to a market for execution.

18. A computerized method for processing electronic orders, the method comprising the steps of:

receiving at a financial market, by a computer, a BUY order and a SELL order for a financial product, wherein the BUY order and the SELL order each have a size and price, the size of the SELL order is greater than or equal to the size of the BUY order, and the price of the SELL order is less than or equal to the price of the BUY order;

determining, by a computer, that one or more away market SELL orders, for the financial product, exist that have an away market price that is less than the price of the SELL order;

creating, by a computer, a first electronic order, wherein the first electronic order is an order to buy a first quantity of the financial product, wherein the first quantity is less than the size of the BUY order;

transmitting, by a computer, the first electronic order to an away market for execution against an away market SELL order; and

executing, by a computer, a remaining quantity of the BUY order and a matching quantity of the SELL order at the financial market, wherein the remaining quantity of the BUY order is calculated by subtracting the first quantity from the size of the BUY order and the matching quantity of the SELL order is equal to the remaining quantity.

19. A computerized method for processing electronic orders, the method comprising the steps of:

receiving at a financial market, by a computer, a BUY order and a SELL order for a financial product, wherein the BUY order and the SELL order each have a size and price, the size of the BUY order is greater than or equal to the size of the SELL order, and the price of the BUY order is greater than or equal to the price of the SELL order;

determining, by a computer, that one or more away market BUY orders, for the financial product, exist that have an away market price that is greater than the price of the BUY order;

creating, by a computer, a first electronic order, wherein the first electronic order is an order to sell a first quantity of the financial product, wherein the first quantity is less than the size of the SELL order;

transmitting, by a computer, the first electronic order to an away market for execution against an away market BUY order; and

executing, by a computer, a remaining quantity of the SELL order and a matching quantity of the BUY order at the financial market, wherein the remaining quantity of the SELL order is calculated by subtracting the first quantity from the size of the SELL order and the matching quantity of the BUY order is equal to the remaining quantity.