Credit management for electronic brokerage system

• US 5,375,055 A
• Filed: 02/03/1992
• Issued: 12/20/1994
• Est. Priority Date: 02/03/1992
• Status: Expired due to Term

• Current Assignee: EBS Dealing Resources, Inc. (CME Group Incorporated)
• Original Assignee: Foreign Exchange Transaction Services Incorporated
• Inventors: Togher, Michael, Dunne, Michael F., Hartheimer, Richard
• Primary Examiner(s): Envall, Jr., Roy N.
• Assistant Examiner(s): HAYES, GAIL O
• Application Number:
  US07/830,408
• Time in Patent Office: 1,051 Days
• Field of Search: 364/408, 340/825.26, 340/825.27
• 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
• CPC Class Codes: H04L 12/1804 for stock exchange and similar applications

Abstract

An anonymous trading system identifies the best bids and offers from those counterparties with which each party is currently eligible to deal, while maintaining the anonymity of the potential counterparty and the confidentiality of any specific credit limitations imposed by the anonymous potential counterparty. To that end, each bid or offer for a particular type of financial instrument is prescreened by the system for compatibility with limited credit information (for example, a one bit flag indicating whether a predetermined limit has already been exceeded) and an anonymous "Dealable" price is calculated for each of the traders dealing with that particular financial instrument.

Claims

1. A comprized trading system for trading of financial instruments between traders trading at a plurality of trading floors, said system comprising a communication network for transmitting electronic messages,

a plurality of trader terminals each associated with a respective one of said trading floors and connected to the communication network, for

generating electronic price quotation messages including bid and/or offer prices, and

communicating selected bid and offer price information based on price quotation messages originating from other said trading floors and received over the communication network,

credit limit administration processing means connected to the communication network, for automatically determining whether a predetermined level of credit is currently available from each trading floor to each of the other trading floors, and

dealable price distribution processing means connected to said communication network and responsive to said price quotation messages as well as to said credit limit administration means for automatically transmitting dealable price messages to the terminals of at least one particular trading floor, said dealable price messages being derived only from price quotation messages from those trading floors for which said credit administration means has determined said predetermined level of credit is currently available on a bilateral basis both from and to said particular trading floor.

2. The trading system of claim 1, wherein said selected price information communicated by the terminal at said particular trading floor comprises said dealable price information.

3. The trading system of claim 2, wherein said dealable price information comprises the best price for a predetermined quantity available from any of said trading floors with which bilateral credit currently exists.

4. The trading system of claim 3, wherein said dealable price information is the best price for said predetermined quantity available from a single one of said trading floors with which bilateral credit currently exists.

5. The trading system of claim 3, wherein said dealable price information is determined from the best prices for said predetermined quantity available on a composite basis from more than one of said trading floors with which bilateral credit currently exists.

6. The trading system of claim 3, wherein said dealable price information further comprises the best price for any quantity available from at least one of said trading floors with which bilateral credit currently exists.

7. The trading system of claim 6, wherein trades are possible for a small quantity less than said predetermined quantity, and said dealable price display means displays a price applicable only to a small, but otherwise dealable, quantity when said predetermined quantity is not available to the associated trading floor.

8. The trading system of claim 1, wherein said dealable price information is communicated in the form of a visible display.

9. The trading system of claim 1, wherein said dealable price information is communicated to at least one of the traders in the form of vocalized text.

10. The trading system of claim 1, further comprising

a plurality of access nodes connected to the communication network, including a first access node associated only with a first trading floor and a second access node associated only with a second trading floor, for maintaining a record of all trades executed on behalf of an associated trading floor, and

one or more distribution nodes connected to the communication network,

wherein

said access nodes collectively comprise said credit authorization processing means,

said distribution nodes collectively comprise said dealable price distribution processing means,

said access nodes transmit over the communication network to said distribution nodes credit update messages which indicate whether said predetermined level of credit is currently available on a unilateral basis from one trading floor to another trading floor without indicating the extent of any credit currently remaining above said predetermined level,

said dealable price distribution processing means maintains at each of said distribution nodes an ordered list of at least those of said price quotation messages which are not yet withdrawn or reserved and a preauthorization matrix whose individual entries collectively indicate whether or not said predetermined level of credit is available on a bilateral basis between each of its respective trading floors and each of said plurality of trading floors,

said dealable price information is transmitted from each said distribution node to one or more of said access nodes for eventual transmission to associated ones of said terminals

each said access node is located on the premises of a respective trading floor and contains only credit information originating with said respective trading floor,

said credit limit adminstration means transmits an electronic credit update message to said distribution nodes whenever a predetermined minimum level of credit becomes available or is no longer available to a particular said trading floor, and

said credit update message does not specify the amount of credit available.

11. The trading system of claim 10, wherein those quotes which are for a price equal to a particular said dealable price and which originate from a trading floor which has bilateral credit available with the trading floor associated with said particular dealable price are identified as "dealable quotes".

12. The trading system of claim 11, wherein the record of executed trades maintained by each access node is used to automatically recover or rollback pending transactions which have been identified by another node as potential trades but which have not yet been fully executed or canceled.

13. The trading system of claim 12, wherein each quote that is identified as a dealable quote but that is not the first dealable quote at at least one trading floor is identified as a "joined" quote.

14. The trading system of claim 10, wherein

said price quotation message includes designation of the trading floor from which the quotation originates,

said trading floor designation is used by said each distribution node in deriving said dealable price messages and

said dealable price message does not include any designation of the trader or trading floor from which the quotation originates, when received by any said market access node or trader terminal.

15. The trading system of claim 10, wherein said current credit limit is derived from a predetermined maximum trade volume and the actual cumulative trade volume between said associated trading floor and one other trading floor dealing in a plurality of types of financial instruments.

16. The trading system of claim 15, wherein said current credit limit is a combined limit applicable to a plurality of related trading floors.

17. The trading system of claim 1, wherein said credit limit adminstration means is responsive to unilateral credit update messages over the communications network from the individual trading floors.