Computer-implemented securities trading system with a virtual specialist function

• US 6,505,174 B1
• Filed: 11/02/1998
• Issued: 01/07/2003
• Est. Priority Date: 03/25/1996
• Status: Expired due to Term

• Current Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Original Assignee: HSX Incorporated
• Inventors: Keiser, Timothy M., Burns, Michael R.
• Primary Examiner(s): Choi, Kyle J.
• Assistant Examiner(s): ALLEN, AKIBA KANELLE
• Application Number:
  US09/184,571
• Time in Patent Office: 1,527 Days
• Field of Search: 705/37, 705/36, 705/35, 705/1
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 10/063 Operations research, analysis or management
• 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

The present invention discloses method, apparatus, and article of manufacture for a computer-implemented financial management system that permits the trading of securities via a network. A server computer receives buy and sell orders for derivative financial instruments from a plurality of client computers. The server computer matches the buy orders to the sell orders and then generates a market price through the use of a virtual specialist program executed by the server computer. The virtual specialist program responds to an imbalance in the matching of the buy and sell orders.

Claims

1. A method for regulating market price in a computerized trading system, the system receiving buy orders and sell orders for a security, the method comprising:

computing a buy-sell imbalance by measuring an imbalance between buy orders and sell orders for the security after fulfilling a trade order;

computing a projected price movement by retrieving a security price threshold from a database, comparing the security price threshold to the buy-sell imbalance, retrieving a security price increment from the database representing a quantity for price movement for the instrument, and setting the projected price movement to the security price increment if the buy-sell imbalance exceeds the security price threshold; and

setting a market price for the security by incrementing the market price by the projected price movement.

2. The method of claim 1, comprising storing a quantity representing price movement for the instrument over time.

3. The method of claim 2, comprising retrieving a stock break increment from the database.

4. The method of claim 3, comprising controlling the rate for price movement by periodically comparing the stock break threshold to the stored quantity representing price movement for the instrument, and adjusting the stock price threshold if the stored quantity price movement exceeds the stock break threshold.

5. The method of claim 4, wherein the step of adjusting the stock price threshold comprises retrieving a stock break increment from the database and incrementing the stock price threshold by the stock break increment.

6. The method of claim 5, wherein the step of incrementing the stock price threshold by the stock break increment comprises:

if the stored quantity representing price movement is a positive number greater than SBT, then SPT=SPT+SBI; and

if the stored quantity representing price movement is a negative number less than −

SBT, then SPT=SPT−

SBI,

wherein SBT is the stock break threshold, SPT is the stock price threshold, and SBI is the stock break increment.

7. The method of claim 2, comprising retrieving a stock halt threshold from the database.

8. The method of claim 7, comprising containing price movement by periodically comparing the stock halt threshold to the stored quantity of price movement for the instrument, and preempting trading for the instrument if the stored quantity of price movement exceeds the stock halt threshold.

9. The method of claim 2, comprising setting the market price for a plurality of securities after each of a plurality of trade orders are fulfilled.

10. The method of claim 9, comprising storing trade volume information and trade price information for each trade order for the plurality of securities.

11. The method of claim 10, further comprising:

receiving a query for requesting trade volume statistics for a selected security;

analyzing the stored trade volume information in response to the received query; and

generating and displaying the trade volume statistics for the selected security in response to said step of analyzing.

12. The method of claim 10, further comprising:

receiving a query for requesting buy versus sell volume statistics for a selected security;

analyzing the stored trade volume information and the stored trade price information in response to the received query; and

generating and displaying the buy versus sell statistics for the selected security in response to said step of analyzing.

13. The method of claim 9, further comprising:

storing a plurality of categories of trade information relating to the plurality of trade orders;

receiving a query for requesting statistics for a selected category in a selected security;

analyzing the stored categories of trade information in response to the received query; and

generating and displaying statistical information for the selected category in the selected security in response to said step of analyzing.

14. The method of claim 1, comprising periodically triggering an automatic trade for the instrument.

15. The method of claim 14, wherein the step of triggering an automatic trade comprises detecting a call from a timing mechanism, retrieving a buy probability constant, generating a random trade constant, and generating a buy order if the buy probability constant exceeds the random trade constant and a sell order if the buy probability constant does not exceed the random trade constant.

16. The method of claim 1, comprising receiving a first value representing an initial number of shares issued in an initial offering for the security.

17. The method of claim 16, comprising calculating an initial price for the security for the initial offering based at least i n part on the first value.

18. The method of claim 17, wherein the security represents a product in development, the method comprising receiving a second value representing an estimated financial performance of the product, and wherein the step of calculating the initial price comprises calculating the initial price as the second value divided by the first value.

19. The method of claim 18, wherein the product represented by the security has a plurality of development stages, comprising identifying the development stage of the product to which the security relates and adjusting the initial price based on the stage of development of the product to which the security relates.

20. The method of claim 19, wherein the product represented by the security is a movie and wherein the development stages are selected from the group consisting of a concept stage, a development stage, a production stage, a wrap stage, and a release stage.

21. The method of claim 19, comprising receiving a development factor for each of development stages and wherein the step of adjusting the initial price comprises multiplying the initial price by the development factor for the identified development stage.

22. A method for conducting market research by regulating market price in a computerized trading system, the system receiving buy orders and sell orders for a plurality of securities, the method comprising:

computing a plurality of buy-sell imbalances by measuring the imbalances between buy orders and sell orders for the security after fulfilling a plurality of trade orders;

computing matching projected price movements for the plurality of trade orders by retrieving a matching plurality of security price thresholds from a database, comparing the matching security price thresholds to the plurality of the buy-sell imbalances, retrieving a plurality of matching security price increments from the database representing matching quantities for price movements for the plurality of instruments, and setting the projected price movements for the plurality of securities to the matching security price increments for the buy-sell imbalances which exceed the matching security price thresholds; and

setting market prices for the plurality of securities by incrementing market prices of the securities by the matching projected price movements.

23. The method of claim 22, further comprising:

storing a plurality of categories of trade information relating the securities, trade orders and matching market prices;

receiving a query criteria for requesting statistics for a selected category in a selected security;

analyzing the stored categories of trade information in response to the received query; and

generating and displaying statistical information for the selected category in the selected security in response to said step of analyzing.

24. The method of claim 23, comprising assessing public awareness of the security based on trade volume data included in the stored trade information.

25. The method of claim 23, comprising assessing public awareness of the security based on the trade volume data and buy and sell price data relating to the security.