Trading system for fixed-value contracts
First Claim
1. A trader-controlled trading system for implementation on a computer network, said trading system comprising:
- (a) a computer network comprising a host computer having access to database means for recording attributes of bids placed by traders, a plurality of remote terminals, and network means allowing bi-directional communications between the host computer and each of said remote terminals;
(b) a trading instrument concerning a stated subject matter, each unit of said trading instrument having a fixed face value and further having two opposing sides that respectively represent mutually exclusive outcomes regarding a subject matter of said trading instrument;
(c) software means for enabling traders as users of said remote terminals to view attributes of said trading instrument and to place, with said host computer, bids to purchase at least one unit of a specified side of said trading instrument, and further providing for each mid bid placed by a trader to specify a selected one of said two sides, to specify a bid price per trading instrument unit that is less than a fixed face value, and to specify a selected quantity of trading instrument units; and
(d) software bid matching means for declaring a matched trade between a first bid placed to purchase at least one unit of one side of said trading instrument and a second bid placed to purchase at least one unit of the opposing side of said trading instrument where a sum of the prices per unit specified in said first and second bids are in an aggregate at least equal to a face value of said trading instrument.
1 Assignment
0 Petitions
Accused Products
Abstract
A trading system for the trading of fixed-value contracts employs a novel form of contract that has a fixed face value and two sides that respectively represent mutually exclusive outcomes. Traders submit bids specifying a selected “side” of the contract, a price, and a contract quantity specification, for matching with complementary bids submitted for the opposing “side” of the contract, thereupon occasioning “filled” trades. Upon the termination of the contract in accordance with pre-established criteria, resulting in the determination of a prevailing side of the contract, holders of filled contracts whose bid specified the prevailing “side” of the contract receive the face value of the contract. The trading system of the invention is preferably implemented In computerized embodiments that enable traders to submit bids to a host computer over a network, and said host computer provides traders with access to all pertinent trading information in real time, automatically matches complementary bids, and enables the immediate clearing and settlement of all filled trades from deposit accounts established by traders using the system.
280 Citations
26 Claims
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1. A trader-controlled trading system for implementation on a computer network, said trading system comprising:
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(a) a computer network comprising a host computer having access to database means for recording attributes of bids placed by traders, a plurality of remote terminals, and network means allowing bi-directional communications between the host computer and each of said remote terminals;
(b) a trading instrument concerning a stated subject matter, each unit of said trading instrument having a fixed face value and further having two opposing sides that respectively represent mutually exclusive outcomes regarding a subject matter of said trading instrument;
(c) software means for enabling traders as users of said remote terminals to view attributes of said trading instrument and to place, with said host computer, bids to purchase at least one unit of a specified side of said trading instrument, and further providing for each mid bid placed by a trader to specify a selected one of said two sides, to specify a bid price per trading instrument unit that is less than a fixed face value, and to specify a selected quantity of trading instrument units; and
(d) software bid matching means for declaring a matched trade between a first bid placed to purchase at least one unit of one side of said trading instrument and a second bid placed to purchase at least one unit of the opposing side of said trading instrument where a sum of the prices per unit specified in said first and second bids are in an aggregate at least equal to a face value of said trading instrument. - View Dependent Claims (2, 3, 4, 5, 6)
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7. A trader-controlled trading system comprising for each trading event:
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a) a single trading instrument having a fixed face value and two opposing sides representing mutually exclusive outcomes, b) means for traders to submit bids to purchase, at a price per trading instrument unit that is always less than said fixed face value, at least one unit of either side of said trading instrument, c) means for comparing bids submitted to the trading system, d) means for declaring a matched trade when a first bid submitted on one of said sides specifies a purchase price that, added to the purchase price specified in a second bid submitted on the opposing side, at least equals said face value, and e) means for determining that one of said two sides of the trading instrument is a prevailing side. - View Dependent Claims (8, 9)
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10. A computer-implemented trader-controlled trading method that employs for each trading event a single trading instrument having a fixed face value and two opposing sides that represent mutually exclusive outcomes, said method comprising the following steps performed by said computer:
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a) soliciting bids to purchase, at prices per trading instrument less than said face value, units of either side of said trading instrument, b) receiving at least one bid to purchase a unit of one side of said trading instrument at an offered purchase price less tan said face value, and receiving at least one bid to purchase a unit of the opposing side of said trading instrument also at an offered purchase price less than said face value;
c) comparing bids received, and d) declaring a matched trade when the offered purchase price of a first bid specifying one of said sides, added to the offered purchase price of a second bid specifying the opposing side, at least equals said face value. - View Dependent Claims (11, 12)
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13. A trader-controlled trading method conducted over a telecommunications network comprising a host computer, a plurality of remote terminals, and telecommunications means connecting said host computer and said remote terminals and enabling a transmission of data to and from said host computer and each of said remote terminals, said method comprising the following steps for each trading event:
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a) the dissemination by the host computer to said remote terminals, for bidding thereon by users of said remote terminals, of a single trading instrument having a fixed face value and two opposing sides representing mutually exclusive outcomes regarding a subject matter of said trading instrument, b) receiving in said host computer a plurality of bids entered from said remote terminals, each of said bids specifying a selected one of said two sides of a trading instrument and also specfying a purchase price per unit of said trading instrument for a purchase of at least one unit of said trading instrument, c) said host computer declaring a matched trade upon receiving a first bid specifying one side of said trading instrument and a second bid specifying the opposing side of said instrument, where a purchase price set forth in said first bid and a purchase price set forth in said second bid are each less in amount than said face value and a sum of the purchase prices per unit specified in said first bid and said second bid at equals said face value. - View Dependent Claims (14, 15, 16, 17, 18, 19, 20, 21, 22)
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23. A computerized system for trading in a single market units of a fixed value trading instrument having two complementary sides, comprising:
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a) means for receiving and storing bids received from remote trader terminals to purchase at least one unit of one side of said trading instrument each of said bids comprising a purchase price term and a unit quantity term, b) means for receiving and storing bids received to purchase at least one unit of an opposing side of the trading instrument from remote trader terminals, each of said bids comprising a purchase price term and a unit quantity term, c) means for coupling bids received on one side of the trading instrument with said stored bids received on the opposing side of said trading instrument for comparing the purchase price and quantity terms of opposing bids, and d) means for executing a binding trade when a match exists between at least one bid received on one side of said trading instrument and at least one stored bid received on the opposing side of said trading instrument, and e) means for clearing and settling each said binding trade.
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24. A computer-implemented method of automatically and equitably effectuating trades of a fixed value trading instrument having two opposing sides between subscribers in a computerized trading system wherein a host computer is coupled to a plurality of individual trader terminals, said method comprising the following steps performed by said computer:
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a) booking on a first bid list, in a priority sequence according to a predetermined program, unfilled bids including associated purchase price and lot quantity parameters received on one side of the trading instrument, b) booking on a second bid list, in said priorily sequence according to said predetermined program, unfilled bids including associated purchase price and lot quantity parameters received on the other side of the trading instrument;
c) comparing in said priority sequence the purchase price and lot quantity parameters of each of said unfilled bids booked on said first bid list with the purchase price and lot quantity parameters of sald unfilled bids on said second bid list, d) transacting said received bid on said first bid list with a highest priority bid or bids on a complementary list if said bid can be matched against one or more bid orders on a complimentary bid order list, and e) placing an untransacted portion of said incoming bid order on a corresponding one of said list in a priority sequence according to the corresponding one of said predetermined programs if said incoming bid order cannot be completely matched against any bid order or orders on said complementary bid order list. - View Dependent Claims (25, 26)
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Specification