Credit management for electronic brokerage system

• US 6,985,883 B1
• Filed: 05/02/2000
• Issued: 01/10/2006
• Est. Priority Date: 02/03/1992
• Status: Expired due to Term

• Current Assignee: EBS Dealing Resources, Inc. (CME Group Incorporated)
• Original Assignee: EBS Dealing Resources, Inc. (CME Group Incorporated)
• Inventors: Dunne, Michael F., Hartheimer, Richard, Togher, Michael
• Primary Examiner(s): Colbert, Ella
• Application Number:
  US09/563,461
• Time in Patent Office: 2,079 Days
• Field of Search: 705 35- 38, 705/1
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• 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 (FIG. 1) identifies the best bids and offers (QuoteSubmit, FIG. 3) from those counterparties (WS A1a1) with which each party (WS A1fb1, WS A1b2, ... WS A2a2) 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 (QuoteSubmit, FIG. 3) 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 (24,26) is calculated for each of the traders (WS A1b, . . . WS A2a) dealing with that particular financial instrument.

Claims

1. A computerized trading system for enabling a plurality of traders to trade with one another, the trading system comprising:

a central computer system including at least one computer, the central computer system receiving quotes;

a plurality of trader terminals, each of the trader terminals being associated with a respective trader, at least some of the traders sending one or more of the quotes to the central computer system via their respective trader terminals;

the central computer system forwarding best dealable quote information to each trader terminal of at least a subset of the trader terminals indicating which of the quotes received by the central computer system is the best quote which can be accepted by the trader using the respective trader terminal as a function of credit information related to such trader; and

each trader terminal of the subset displaying the best dealable quote which the trader associated with that trader terminal can accept as a function of the best dealable quote information sent to it whereby such best dealable quote has been prescreened for credit.

2. The computerized trading system of claim 1, wherein the central computer system is a distributed system of computers.

3. The computerized trading system of claim 2, wherein at least some of the computers are located at locations remote from one another.

4. The computerized trading system of claim 1, wherein the subset of trader terminals includes at least three trader terminals.

5. The computerized trading system of claim 1, wherein the subset of trader terminals is all of the trader terminals.

6. The computerized trading system of claim 1, wherein:

a plurality of businesses use the computerized trading system;

each of the trader terminals is associated with an associated one of the businesses; and

the central computer system receives a respective portion of the credit information from each of the businesses.

7. The computerized trading system of claim 6, wherein the portion of the credit information received from each of the respective businesses indicates credit information about at least one of the other businesses.

8. The computerized trading system of claim 1, wherein the quotes are for a product.

9. The computerized trading system of claim 8, wherein the product is a financial instrument.

10. The computerized trading system of claim 9, wherein the financial instrument is a currency pair.

11. The computerized trading system of any one of claims 1 through 10, wherein the credit information is bilateral credit information related to respective pairs of traders.

12. The computerized trading system of claim 1, wherein, for each respective trader using the subset of trader terminals, the credit information related to the respective trader includes information indicating whether entities associated with other traders have granted credit to the respective trader.

13. The computerized trading system of claim 12, wherein the entities associated with other traders grant credit to the respective trader by granting credit to an entity with whom the respective trader is associated.

14. The computerized trading system of claim 1, wherein the central computer system also forwards best market quote information to each trader terminal of the subset of trader terminals providing information about best quotes entered into the trading system whether such quotes can be accepted by the trader using that trader terminal based upon credit information related to such trader or not.

15. The computerized trading system of claim 14, wherein the best market quote information is indicative of the best quote entered into the trading system irrespective of whether or not the trader using that trader terminal can accept such quote based upon credit information related to such trader.

16. The computerized trading system of claim 15, wherein each trader terminal of the subset also displays information about the best quote entered into the trading system, whether such quote can be accepted by the trader using that trader terminal or not, based upon the best market quote information forwarded to it.

17. The computerized trading system of claim 14, wherein each trader terminal of the subset also displays information about quotes entered into the trading system that cannot be accepted by the trader using that trader terminal based upon the best market quote information forwarded to it.

18. The computerized trading system of claim 1, wherein the credit information is information related to the amount of credit entities associated with other traders extend to the trader using the trader terminal in question.

19. A computerized method of providing information to a plurality of traders using respective trader terminals, the information relating to quotes which can be accepted by the traders, the method comprising:

sending quotes to a central computer system comprising at least one computer;

determining at the central computer system which quotes can be accepted by each trader as a function of credit information related to that trader;

forwarding information to each respective trader terminal the information being based upon the determination and indicating the best quote that can be accepted by the trader using that trader terminal; and

displaying at each respective trader terminal the best quote the trader using that trader terminal can accept.

20. The method of claim 19, wherein the best quotes that can be accepted by the trader using the respective trader terminal are displayed at designated locations of a display associated with the respective trader terminal.

21. The method of claim 20, wherein the designated locations include a best quote location and a best offer location and wherein the best quote, if any, and best offer, if any, which can be accepted by the trader using the respective trader terminal are displayed in the best quote and offer locations of that trader terminal, respectively.

22. The method of claim 21, wherein no other quotes are displayed in the best quote and best offer locations, respectively.

23. The method of any of claims 19 through 22 and 24, wherein the credit information is bilateral credit information between respective pairs of counter-parties.

24. The method of claim 20, wherein the designated locations are visually distinct locations of the display.

25. A method of trading on a computerized trading system, the method comprising:

entering a quote into the computerized trading system on behalf of a first trading entity;

the computerized trading system determining whether the quote should be offered to a second trading entity as a function of the amount of credit the first trading entity has extended to the second trading entity;

the computerized trading system offering the quote to the second trading entity if the determination is positive and not offering the quote to the second trading entity if it is negative;

the second trading entity indicating that entity'"'"'s desire to accept the quote; and

thereafter

the computerized trading system rechecking the amount of remaining credit the first trading entity is extending to the second trading entity and determining whether all or a portion of the quote can be accepted as a function of the amount of remaining credit.

26. A method for permitting a plurality of market makers to trade anonymously with a plurality of market takers over a computerized trading system, at least some of the market takers using respective taker terminals to trade with one or more of the market makers, the method comprising:

entering quotes from the market makers into the computerized trading system;

entering credit information into the computerized trading system, the credit information being related to the amount of credit at least entities associated with the market makers extend to at least some entities associated with the market takers; and

determining, for each of a plurality of taker terminals, a best quote which can be accepted by the respective market taker using the respective taker terminal as a function of at least both;

(a) the quotes entered into the computerized trading system; and

(b) at least a portion of the credit information entered into the computerized trading system and related to the respective market taker using the respective taker terminal; and

displaying the respective best quote at the respective taker terminals.

27. The method of claim 26, wherein a plurality of the market takers are associated with a single trading floor and wherein part of the entered credit information is indicative of the amount of credit extended to the single trading floor and is therefore related to the amount of credit extended to the market takers associated with the single trading floor.

28. The method of claim 26, wherein each taker terminal displays a respective best quote which can be accepted by the market taker using that taker terminal as a function of both the quotes entered into the computerized trading system and at least a portion of the credit information entered into the computerized trading system.

29. The method of claim 26, wherein at least some of the market makers use respective maker terminals to trade with one or more of the market takers and wherein the market makers enter their quotes into the computerized trading system via their respective maker terminals.

30. The method of claim 26, wherein the credit information is entered into the computerized trading system via administrator terminals.

31. The method of claim 26, wherein:

the entered credit information is also related to the amount of credit at least some of the market takers extend to at least some of the market makers; and

the best quote displayed at the plurality of taker terminals is determined as a function of a portion of the credit information entered into the computerized trading system and related to at least some of the market makers.

32. The method of claim 31, wherein the best quote displayed at each respective taker terminal is determined as a function of bilateral credit between the market taker using the respective taker terminal and the market maker who entered the quote into the computerized trading system.

33. A method of trading on a computerized trading system, the method comprising:

entering a quote into the computerized trading system on behalf of a first trading entity;

the computerized trading system determining whether the quote should be offered to a second trading entity as a function of at least the amount of remaining credit a first credit granting entity, which is associated with the first trading entity, has extended to a second credit granting entity, which is associated with the second trading entity; and

thereafter

the computerized trading system offering the quote to the second trading entity if the determination is positive and not offering the quote to the second trading entity if the determination is negative, whereby the quote has been prescreened for credit.

34. The method of claim 33, wherein the computerized trading system determines whether the quote should be offered to the second trading entity also as a function of the amount of remaining credit the second credit granting entity has extended to the first credit granting entity, whereby the quote has been prescreened for bilateral credit.

35. The method of claim 34, wherein the second trading entity informs the electronic trading system that it wants to accept the quote after it has been offered to the second trading entity.

36. The method of any one of claims 33 and 34, wherein the first and second trading entities are first and second trading floors, respectively, each trading floor having a plurality of traders who trade on the computerized trading system on behalf of their respective trading floors.

37. The method of claim 36, wherein the trading floors are owned by respective businesses.

38. The method of claim 36, wherein the first and second credit granting entities are the first and second trading floors, respectively.

39. The method of claim 36, wherein the quote is entered into the trading system by a trader of the first trading floor.

40. The method of claim 33, wherein the trading entities are the credit granting entities.

41. The method of claim 33, wherein the second trading entity informs the electronic trading system that it wants to accept the quote after it has been offered to the second trading entity.

42. The method of claim 41, wherein, after the second trading entity has indicated its desire to accept the quote, the computerized trading system rechecks the amount of remaining credit the first credit granting entity has extended to a second credit granting entity to determine if there is sufficient remaining credit for the trade to be made.

43. The method of claim 42, wherein, after the second trading entity has indicated its desire to accept the quote, the computerized trading system rechecks the amount of remaining credit the first credit granting entity has extended to a second credit granting entity and the amount of remaining credit the second credit granting entity has extended to the first credit granting entity, to determine if there is sufficient remaining bilateral credit for the trade to be made.

44. The method of any one of claims 33 and 34, wherein the computerized trading system comprises a central computer system including at least one computer and a plurality of trader terminals.

45. The method of claim 44, wherein the computer offers the quote to the second trading entity via one or more trader terminals associated with the second entity.