Automated auction protocol processor

• US 5,905,974 A
• Filed: 12/13/1996
• Issued: 05/18/1999
• Est. Priority Date: 12/13/1996
• Status: Expired due to Term

• Current Assignee: Cantor Fitzgerald, L.P., CFPH LLC (Cantor Fitzgerald, L.P.)
• Original Assignee: Cantor Fitzgerald Securities (Cantor Fitzgerald, L.P.)
• Inventors: Paul, Bijoy, Fraser, Stuart A., Lutnick, Howard
• Primary Examiner(s): MacDonald, Allen R.
• Assistant Examiner(s): Myhre, James W.
• Application Number:
  US08/766,733
• Time in Patent Office: 886 Days
• Field of Search: 705/35, 705/36, 705/37
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• 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 data processing system for implementing transaction management of auction-based trading for specialized items such as fixed income instruments. The data processing system provides a highly structured trading protocol implemented through a sequence of trading paradigms. The system employs a distributed computer processing network linking together a plurality of commonly programmed controlled workstations. The protocol and its programmed controlling logic enhances trading efficiency, rewards market makers and fairly distributes market opportunity to system users.

Claims

1. In combination in a data processing system for implementing a structured trading environment for transacting the purchase and sale of select items having a predetermined set of characteristics wherein said data processing system is operated by a plurality of trading participants through a specific communication platform to permit exchanging positions regarding offers and bids and for receiving select participant trade commands relating to said items, comprising:

a plurality of workstations comprising a display means for presenting to a participant information about pending market conditions as they relate to said items being traded and the select positions taken by other participants in regard to said items;

a central server in communication with said workstations, linked to said workstations and programmed to support a predetermined trading control logic wherein said trading control logic comprises a protocol of trade sequences initiated from a bid/offer state by a participant hit or lift trade command wherein said protocol is directed to implement trade commands from said participants in a predefined way corresponding to the development of a plurality of trade specific states defining the ability of various participants to participate in said trading activity.

2. The trading system of claim 1 wherein said protocol is defined by a stored program comprising a logic structure that defines conditions where a participant becomes a trader and conditions where other participants may participate in a trade.

3. The trading system of claim 1 wherein said participant commands comprise bids, offers, hits and lifts.

4. The trading system of claim 1 wherein said trading states is comprised of a Bid/Offer State and a Workup State.

5. The trading system of claim 4 wherein aid trading states further comprise a When State.

6. The trading system of claim 5 wherein said trading states further comprises a Second Look State.

7. The trading system of claim 6 wherein said trading state further comprise a Workdown State.

8. The trading system of claim 1 wherein said display provides a presentation of a bid side and an offer side of a market.

9. The trading system of claim 8 wherein said display further provides information as to the size of uncleared bids and/or offers.

10. The trading system of claim 8 wherein said display further provides a queue of participants organized in groups corresponding to their respective participation on the bid or offer side of the market.

11. The trading system of claim 10 wherein said participant'"'"'s queue is ordered by time and size of entry.

12. The trading system of claim 11 wherein said queue order is further based on quality of entry in terms of price.

13. The trading system of claim 12 wherein said display provides information regarding the entry of a hit or lift by a participant.

14. The system of claim 1, wherein said item is selected from the group consisting of commodities, securities, indices, and futures contracts.

15. The system of claim 1, wherein said item is a futures contract.

21. The trading system of claim 14 wherein said display means presents information on trade transactions and participant access is contingent on a system trading state.

16. A computer trading system for use by multiple participants wherein each participant operates a custom designed keypad for data entry and receives information about market conditions from a display comprising:

a data processor with associated data storage for providing a trading protocol that establishes trading hierarchy among participants;

a trade command input means including said custom designed keypad wherein said keypad includes a plurality of trade execute keys, individually assigned to a particular security available for trading, said keypad further comprises a plurality of participant entry keys assigning trade commands to a particular participant;

a display means for presenting a trading information profile wherein said trading profile includes pending offers and bids at select price points and size.

17. The trading system of claim 16 wherein said input means provides single keystroke entry for trade cancel command.

18. The trading system of claim 16 wherein said data processor provides for a Bid/Offer State wherein customers'"'"' price and size are displayed on said display means.

19. The trading system of claim 18 wherein said Bid/Offer State is terminated by a participant entry of a hit or lift command.

20. The trading system of claim 18 wherein said Bid/Offer State is moved to a "When" State by a non-priority participant'"'"'s entry of a hit or lift.

22. The system of claim 16, wherein said bids and offers are indicative of an item selected from the group consisting of commodities, securities, indices, and futures contracts.

23. The system of claim 16, wherein said bids and offers are indicative of a futures contract.

24. A method of financial instrument trading implemented on a distributed workstation computer system, wherein said system provides for a predetermined trading protocol delineating participant access comprising the steps of:

a. providing a Bid/Offer System State wherein participants participate by actively monitoring trading wherein some of said participants enter bids, offers, price and volume information;

b. distributing said information to said plural workstations in essentially real time;

c. receiving trade hits and/or lifts from said participants responding to pending bids/offers as displayed on said workstations;

d. entering a Trading State wherein transactions are completed at one or more system defined prices;

e. returning to the Bid/Offer State after a pre-established termination event in said Trading State;

f. tracking and outputting consummated trades from said Trading State.

25. The method of claim 24 wherein said Trading State is further delineated into a Workdown and a Workup State.

26. The method of claim 25 wherein said Workup State is created by a single participant hitting or lifting all pending size.

27. The method of claim 26 wherein said Workdown State is created by a participant hitting or lifting less than all of said pending size.

28. The method of claim 24 wherein said trading protocol is encoded in programming logic controlling said computer system.

29. The method of claim 24, wherein said bids and offers are indicative of an item selected from the group consisting of commodities, securities, indices, and futures contracts.

30. The method of claim 24, wherein said bids and offers are indicative of a futures contract.