Automated futures trading exchange

• US 4,903,201 A
• Filed: 11/03/1983
• Issued: 02/20/1990
• Est. Priority Date: 11/03/1983
• Status: Expired due to Term

• Current Assignee: eSpeed Incorporated (BGC Group, Inc.)
• Original Assignee: World Energy Exchange Corporation
• Inventors: Wagner, Susan W.
• Primary Examiner(s): Smith, Jerry
• Assistant Examiner(s): Grossman, Jon D.
• Application Number:
  US06/548,319
• Time in Patent Office: 2,301 Days
• Field of Search: 364/200, 364/900, 364/300, 364/408, 340/825.26, 235/375
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A computerized open outcry exchange system for transacting sales of a particular futures commodity contract by members of a futures trading exchange wherein bids to purchase or offers to sell the particular commodity contract are made by the members through remote terminals and the exchange computer automatically matches offers and bids to complete the transaction.

Claims

1. A computerized open outcry exchange system for transacting sales of a particular futures commodity contract in varying volumes or lot sizes by members of a futures trading exchange as principals or agents for others wherein bids to purchase or offers to sell said particular commodity contract are made by said principals or agents through remote terminals, said system comprising:

a. means for receiving and storing bids and offers from said remote terminals and automatically completing a transaction of matching bids and offers on a first-come, first-served basis thereby establishing a trading system,

b. means for storing CFTC requirements and regulations to be observed on said buy and sell transactions thereby establishing a clearing system,

c. means coupling said stored CFTC requirements and regulations in said clearing system to said trading system for comparing said transaction with said stored requirements and regulations thereby determining the validity of each transaction,

d. means for storing predetermined compliance criteria necessary to detect illegal trade practices or trade patterns which would adversely affect said commodity market thereby establishing a compliance system, and

e. mean coupling said stored compliance criteria in said compliance system to said trading system and said clearing system for automatically comparing said transaction determined to be valid to said predetermined compliance criteria thereby enabling detection of illegal trade practices and trade patterns which would adversely affect said commodity market.

2. A system as in claim 1 further including:

a. means in said remote terminals for identifying by code said member, as agent or a principal, making said bid or offer, and

b. a central processor in said trading system having means for recording said identify code whereby said agent or principal may be identified.

3. A system as in claim 2 further including:

a. means in said central processor for storing relevant information relating to each received bid or offer including prioritizing each received bid or offer on the basis of price, lot size and time received by said central processor, said

b. display means in said remote terminals coupled to said central processor for receiving said prioritized bids and offers and displaying at least a part of all bids in descending price order and all offers in ascending price order.

4. A system as in claim 3 further including:

a. a movable cursor on said remote terminal display for identifying said member'"'"'s bid or offer, and

b. keyboard means in said remote terminal for modifying said member'"'"'s bid or offer identified by said movable cursor by entering data through said keyboard modifying said selected bid or offer.

5. A system as in claim 2 further including:

a. means coupled to said recording means in said central processor for accessing relevant information relating to at least a part of said stored bids and offers for a particular commodity contract, and

b. means coupled to said accessing means for determining the breadth of the market for that commodity contract by displaying the number of bids for any particular number of offers based on said relevant information.

6. A system as in claim 2 further including:

a. means coupled to said recording means in said central processor for accessing relevant information relating to said stored bids and offers for a particular commodity contract, and

b. means coupled to said accessing means for displaying bid or offer lot sizes, last sales price, daily price ranges, and volume of trades of said commodity contracts occurring over any predetermined period of time.

7. A system as in claim 6 wherein said display means displays the variations in lot size, last sales price, daily price ranges, and volumes of trades of said commodity contracts that occur between various ones of said predetermined periods of time.

8. A system as in claim 2 further including printing means at each remote terminal coupled to said central processor for printing the execution of each transaction initiated by a particular terminal including date, time, lot size and price of said commodity contract.

9. A system as in claim 2 further including:

a. means in said central processor for establishing trading limits in dollar volume for any particular remote terminal, and

b. means in said clearing system coupled to said remote terminals for rejecting any bid or offer from said remote terminal that exceeds the trading limits established for each of said terminals.

10. A system as in claim 2 further including:

a. means in said compliance system for accessing said storage means in said central processor, and

b. means coupled to said accessing means for detecting patterns of trading which may be manipulative by displaying times of receipt of said bids and offers, the agent or principal making said trades, or the history of trading of said agent or principal.

11. A system as in claim 2 further including:

a. a printer coupled to said central processor, and

b. means selectively coupling said central processor storage to said printer for printing the volume of trading of any commodity contract over any predetermined period of time.

12. A system as in claim 2 further including:

a. a portable hand-held terminal for receiving and generating buy and sell data for features commodity contracts,

b. a modem coupled to said portable hand-held terminal for converting said generated data to information capable of being transmitted to said trading system and converting said received data to information capable of being used by said portable terminal, and

c. telephone lines coupling said modem converted information to and from said trading system.

13. A system as in claim 12 wherein said portable hand-held terminal further comprises:

a. a display,

b. a keyboard containing commodity keys, buy and sell keys, numerical entry keys and control keys,

c. means for generating said member identification code uniquely identifying a particular hand-held terminal, and

d. means for storing said transaction in said member remote terminal and only displaying said transaction at said portable terminal.

14. An automated system for transacting a sale of a particular futures commodity contract in predetermined volumes or lot sizes by members of the trading system as principals or agents for others wherein bids to purchase or offers to sell are made by said principals or agents for said particular commodity contract, said system comprising:

a. remote terminals for initiating and transmitting transaction data including buyer'"'"'s bids and seller'"'"'s offers,

b. a central processor for receiving said buyer'"'"'s bids and seller'"'"'s offers thereby forming a trading system,

c. means in said central processor for completing a transaction by comparing received bids with received offers to find a matching bid and offer,

d. means coupled to said trading system and said remote terminals for storing predetermined trading constraints and approving only those bids and offers coming within said constraints thereby forming a clearing system,

e. means coupled to said trading system and said clearing system for storing predetermined criteria representing fraudulent trading practices and comparing said transaction data with said predetermined criteria thereby establishing a compliance system for enabling detection of said fraudulent trading practices, and

f. means in said central processor for notifying the remote terminals of a completed transaction when a matched bid and offer are found.

15. A system as in claim 14 further including:

a. a storage means in said central processor and

b. means coupled to said storage means for storing said received bids and offers according to time, price and lot size for a particular commodity contract.

16. A system as in claim 15 further including:

a. means in said central processor for matching said bids and offers on a priority basis where first received bids and first received offers are matched, and

b. means coupled to said matching means for completing said transaction of said matched bids and offers on a first received in time basis.

17. A system as in claim 14 wherein said received bids and offers are stored in respective memory queues according to commodity contract by time, lot size, and price.

18. A system as in claim 17 further including means in said central processor for reporting to said remote terminals last sales of a commodity contract by time, lot size, and price.

19. A system as in claim 17 further including means in said central processor for reporting to said remote terminals bids and offers by type of commodity contract as received by time, quantity, and price.

20. A system as in claim 17 further including means in said central processor for notifying remote terminals of filled and unfilled orders.

21. A system as in claim 17 further including memory means in said central processor for maintaining a complete trading history of each trading system member.

22. A system as in claim 14 further including:

a. means for identifying each exchange member by an electronic code,

b. means in said clearing system for storing limits of trade for each member, and

c. means in said central processor coupled to said trade limit storing means and said exchange identifying means for rejecting any proposed trade from a member that exceeds the established position limits.

23. A method of transacting a sale of a particular futures commodity in varying volumes or lot sizes by members of a futures trading exchange as principals or agents for others wherein bids to purchase or offers to sell are made by said principals or agents for said particular commodity, said method comprising the steps of:

a. receiving in a central processor buyer bids and seller offers on a particular commodity from remote terminals,

b. storing in said central processor said bids and offers in the form of time, price and lot size of each of said received bids and offers,

c. comparing said received bids and offers and matching equal bids and offers on a first cone, first served basis according to the time of receiving said bids and offers thereby storing a trading system,

d. storing buy and sell constraints on each member of said exchange thereby forming a clearing system,

e. coupling said clearing system to said trading system for approving execution of a transaction only when said transaction falls within said predetermined buy and sell constraints,

f. executing the buy and sell transaction for a particular commodity for which said offer and bid have been matched and approved by said clearing system,

g. storing predetermined compliance criteria necessary to detect illegal trade practices thereby forming a compliance system,

h. coupling said compliance system to said trading system and said clearing system for detecting any illegal trade practices as indicated by said stored predetermined criteria, and

i. confirming the execution of an approved transaction immediately to both buyer and seller at the remote terminals whose bid and offer are matched.

24. A method as in claim 23 further comprising the steps of:

a. identifying by code at said remote terminals whether an agent or a principal has made said bid or offer, and

b. recording said identity code in said central processor whereby said agent or principal may be identified.

25. A method as in claim 24 further comprising the steps of:

a. prioritizing each received bid or offer on the basis of price, lot size and time received by said central processor, and

b. receiving said prioritized bids and offers and displaying all bids in descending price order and all offers in ascending price order.

26. A method as in claim 25 further comprising the steps of:

a. providing a keyboard and a movable cursor on said remote terminal display,

b. modifying a bid or offer by moving said cursor to said displayed bid or offer, and

c. entering modifying data through said keyboard.

27. A method as in claim 24 further including the step of printing the execution of each transaction initiated by a particular remote terminal coupled to said central processor including date, time, lot size and price of said transaction and the name of the other member completing said transaction.

28. A system as in claim 24 wherein said step of detecting illegal trade practices comprises:

a. accessing said storage means in said central processor, and

b. displaying times of receipt of said bids and offers, the agent or principal making said trades, and the history of trading cf said agent or principal whereby illegal trade practices are made manifest.

29. A method as in claim 23 further comprising the steps of:

a. accessing said stored bids and offers for a particular commodity, and

b. determining the breadth of the market for that commodity by displaying the number of bids for any particular number of offers.

30. A method as in claim 23 further comprising the steps of:

a. accessing said stored bids and offers for a particular futures commodity, and

b. displaying bid or offer lot sizes, last sales price, daily price ranges, and volume of trades of said futures commodity occurring over any predetermined period of time.

31. A method as in claim 30 further including the step of displaying the variations in lot size, last sales price, daily price ranges, and volumes of trades of said commodity that occur between various ones of said predetermined periods of time.

32. A method as in claim 23 further comprising the steps of:

a. storing in at said central processor trading limits in dollar volume for any particular remote terminal, and

b. rejecting any bid or offer from any said remote terminal that exceeds the stored trading limits for each of said terminals.

33. A method as in claim 24 further comprising the steps of:

a. coupling a printer to said central processor, and

b. selectively coupling said central processor storage to said printer for printing the volume of trading of any commodity over any particular period of time.

34. A method of storing an automated futures trading system for transacting a sale of a particular commodity in predetermined volumes or lot sizes by members of the trading system as principals or agents for others wherein bids to purchase or offers to sell said particular commodity are made by said principals or agents, said method comprising the steps of:

a. initiating and transmitting buyer'"'"'s bids and seller'"'"'s offers from remotely terminals,

b. determining whether said buyer'"'"'s bids and seller'"'"'s offers are valid,

c. comparing received valid bids with received valid offers to find a matching bid and offer on a first-come, first-served basis,

d. reviewing said valid bids and offers to detect illegal trading practices, and

e. notifying the remote terminals of a completed transaction when a matched bid and offer are found.

35. A method as in claim 34 further comprising the steps of:

a. forming a storage means in said central processor, and

b. storing said received bids and offers according to time, price and lot size for a particular commodity in said storage means.

36. A method as in claim 35 further comprising the steps of:

a. matching said bids and offers stored in said central processor on a priority basis where first received bids and first received offers are matched, and

b. completing said transaction of said matched bids and offers on a first received in time basis.

37. A method as in claim 34 further including the step of storing said received bids and offers in respective memory queues according to time, lot size, price and commodity.

38. A method as in claim 37 further comprising the step of reporting to said remote terminals last sales by time, lot size, price and commodity.

39. A method as in claim 37 further comprising the step of reporting to said remote terminals bids and offers as received by time, lot size, price and commodity.

40. A method as in claim 37 further comprising the step of notifying remote terminals of filled and unfilled orders.

41. A method as in claim 37 further comprising the step of maintaining a complete trading history of each trading system member.

42. A system as in claim 34 further comprising the steps of:

a. identifying each exchange member by an electronic code,

b. establishing limits of trade for each member, and

c. rejecting any proposed trade from a member that exceeds the established position limits.