Method for directing and executing certified trading interests

• US 7,356,500 B1
• Filed: 06/01/2000
• Issued: 04/08/2008
• Est. Priority Date: 06/01/2000
• Status: Active Grant

• Current Assignee: Virtu ITG Software Solutions LLC
• Original Assignee: Aritas Group, Inc.
• Inventors: Federspiel, Fred J., Waelbroeck, Henri, Angel, James J.
• Primary Examiner(s): NGUYEN, NGA B
• Application Number:
  US09/585,049
• Time in Patent Office: 2,868 Days
• Field of Search: 705/26, 705/27, 705/37, 705/38, 705/39, 705/40, 705/35, 705/36
• 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

Abstract

Preferred embodiments of the subject invention overcome the limitations of known trading interest dissemination and execution systems by (1) enabling market participants to limit dissemination of trading interests to only those other market participants likely to have a significant contra-interest, (2) enabling market participants to ensure that other market participants'"'"' disseminated trading interests are legitimate, and (3) enabling auctions among trading interests targeted and validated in this manner. Software of a preferred embodiment identifies likely contra-interests by analyzing information from various sources regarding certified trading interests.

Claims

1. A method of managing securities market information, comprising the steps of:

(a) electronically receiving over a computer network data including confidential trading interest information of securities market participants, wherein said data is not disseminated to any market participant upon receipt or at any future time and comprises data whose dissemination could affect the price or availability of a security;

(b) electronically storing said received data including confidential trading interest information of securities market participants;

(c) electronically receiving information from a first securities market participant'"'"'s computer;

(d) electronically storing said information received from said first securities market participant'"'"'s computer;

(e) producing a targeted dissemination list of securities market participants based on said confidential trading interest information of securities market participants and said information received from said first securities market participant'"'"'s computer, wherein said targeted dissemination list excludes one or more market participants identified as unlikely to take the contra side to a specified trade and likely to use said information received from said first securities market participant'"'"'s computer in a manner that would affect the price or availability of said security; and

(f) electronically transmitting to the securities market participants on said targeted dissemination list data based on said information received from said first securities market participant'"'"'s computer;

wherein said first securities market participant'"'"'s computer does not receive said confidential trading interest information of said securities market participants and does not receive information about size or composition of said targeted dissemination list.

2. The method of claim 1 wherein said confidential trading interest information comprises certified trading interest information.

3. The method of claim 1 further comprising the step of certifying said confidential trading interest.

4. The method of claim 1 wherein said information received from said first securities market participant'"'"'s computer includes specific dissemination parameters.

5. The method of claim 4 wherein said specific dissemination parameters include certified trading interest requirements.

6. The method of claim 1 wherein said data including confidential trading interest information of securities market participants includes information regarding investment holdings.

7. The method of claim 1 further comprising the steps of:

electronically receiving data from securities market participants on said targeted dissemination list;

electronically storing said received data from securities market participants on said targeted dissemination list; and

electronically transmitting information back to the first securities market participant'"'"'s computer based on said stored data received from securities market participants on said targeted dissemination list.

8. The method of claim 7 further comprising the step of electronically transmitting information based on said stored data received from securities market participants on said targeted dissemination list to one or more other securities market participants.

9. The method of claim 7 wherein said information transmitted back to the first securities market participant'"'"'s computer includes an interest in negotiation.

10. The method of claim 2 further comprising the steps of:

electronically receiving data from securities market participants on said targeted dissemination list;

electronically storing said received data from securities market participants on said targeted dissemination list; and

electronically transmitting information back to the first securities market participant'"'"'s computer based on said stored data received from securities market participants on said targeted dissemination list.

11. The method of claim 10, wherein said information electronically transmitted back to the first securities market participant'"'"'s computer comprises an order.

12. The method of claim 1, wherein said confidential trading interest information of securities market participants comprises information regarding positions held in securities, securities trades executed, and active securities orders.

13. The method of claim 1, wherein said information received from a first securities market participant'"'"'s computer comprises numbers of shares of a specified security bought and sold by said first securities market participant during a specified time period.

14. The method of claim 13, wherein said confidential information is provided with the understanding that said information will not be provided to third parties, said confidential information is indeed not provided to said parties, including other market participants and said first securities market participant is provided with verification that said confidential information has not been shared with third parties.

15. The method of claim 13, wherein said confidential information is provided with the understanding that said first securities market participant will be provided with confidential trading interests of other securities market participants.

16. The method of claim 1 wherein said targeted dissemination list comprises likely contra parties for said confidential trading interest.

17. The method of claim 1 wherein said targeted dissemination list excludes contra parties likely to misuse knowledge of said confidential trading interest.

18. The method of claim 17 wherein said contra parties likely to misuse knowledge of said confidential trading interest comprise parties likely to front run.

19. The method of claim 17 wherein said contra parties likely to misuse knowledge of said confidential trading interest comprise parties likely to peg game.

20. A computer program, stored in a computer memory, for managing securities market information comprising:

(a) software for electronically receiving over a computer network data including confidential trading interest information of securities market participants, wherein said data is not disseminated to any market participant upon receipt or at any future time and comprises data whose dissemination could affect the price or availability of a security;

(b) software for electronically storing said received data including confidential trading interest information of securities market participants;

(c) software for electronically receiving information from a first securities market participant'"'"'s computer;

(d) software for electronically storing said information received from said first securities market participant'"'"'s computer;

(e) software for producing a targeted dissemination list of securities market participants based on said confidential trading interest information of securities market participants and said information received from said first securities market participant'"'"'s computer, wherein said targeted dissemination list excludes one or more market participants identified as unlikely to take the contra side to a specified trade and likely to use said information received from said first securities market participant'"'"'s computer in a manner that would affect the price or availability of said security; and

(f) software for electronically transmitting to the securities market participants on said targeted dissemination list data based on said information received from said first securities market participant'"'"'s computer;

wherein said first securities market participant'"'"'s computer does not receive said confidential trading interest information of said securities market participants and does not receive information about size or composition of said targeted dissemination list.

21. The program of claim 20 wherein said confidential trading interest information comprises certified trading interest information.

22. The program of claim 20 further comprising software for certifying said confidential trading interest.

23. The program of claim 20 wherein said information received from said first securities market participant'"'"'s computer includes specific dissemination parameters.

24. The program of claim 23 wherein said specific dissemination parameters include certified trading interest requirements.

25. The program of claim 20 wherein said data including confidential trading interest information of securities market participants includes information regarding investment holdings.

26. The program of claim 20 further comprising software for:

(a) electronically receiving data from securities market participants on said targeted dissemination list;

(b) electronically storing said received data from securities market participants on said targeted dissemination list; and

(c) electronically transmitting information back to the first securities market participant'"'"'s computer based on said stored data received from securities market participants on said targeted dissemination list.

27. The program of claim 26 further comprising software for electronically transmitting information based on said stored data received from securities market participants on said targeted dissemination list to one or more other securities market participants.

28. The program of claim 26 wherein said information transmitted back to the first securities market participant'"'"'s computer includes an interest in negotiation.

29. The program of claim 21 further comprising software for:

electronically receiving data from securities market participants on said targeted dissemination list;

electronically storing said received data from securities market participants on said targeted dissemination list; and

electronically transmitting information back to the first securities market participant'"'"'s computer based on said stored data received from securities market participants on said targeted dissemination list.

30. The program of claim 29, wherein said information electronically transmitted back to the first securities market participant'"'"'s computer comprises an order.

31. A method of effecting a targeted auction, comprising the steps of:

(a) electronically receiving over a computer network data including confidential trading interest information of securities market participants, wherein said data is not disseminated to any market participant upon receipt or at any future time and comprises data whose dissemination could affect the price or availability of a security;

(b) electronically storing said received data including confidential trading interest information of securities market participants;

(c) electronically receiving information from a first securities market participant'"'"'s computer;

(d) electronically storing said information received from said first securities market participant'"'"'s computer;

(e) producing a targeted dissemination list of securities market participants based on said confidential trading interest information of securities market participants and said information received from said first securities market participant'"'"'s computer, wherein said targeted dissemination list excludes one or more market participants identified as unlikely to take the contra side to a specified trade and likely to use said information received from said first securities market participant'"'"'s computer in a manner that would affect the price or availability of said security; and

(f) electronically transmitting to the securities market participants on said targeted dissemination list data based on said information received from said first securities market participant'"'"'s computer;

(g) electronically receiving subsequent orders from securities market participants in response to said transmitted data;

(h) conducting an electronic auction among orders including said orders received in response to said transmitted data; and

(i) electronically transmitting the status of orders to the respective securities market participants who initiated them.

32. The method of claim 31 wherein said information from said first securities market participant'"'"'s computer includes auction parameters.

33. The method of claim 31 wherein said information received from said first securities market participant'"'"'s computer includes specific dissemination parameters.

34. The method of claim 33 wherein said specific dissemination parameters include certified trading interest requirements.

35. The method of claim 31 wherein said data including confidential trading interest information of securities market participants includes information regarding investment holdings.

36. The method of claim 31 wherein rules governing said electronic auction grant to said first order execution priority over said subsequent orders.

37. The method of claim 31 wherein rules governing said electronic auction prevent the matching of said subsequent orders and an order other than said first order until said first order is canceled or filled.

38. A computer program, stored in a computer memory, for effecting a targeted auction, comprising:

(a) software for electronically receiving over a computer network data including confidential trading interest information of securities market participants, wherein said data is not disseminated to any market participant upon receipt or at any future time and comprises data whose dissemination could affect the price or availability of a security;

(b) software for electronically storing said received data including confidential trading interest information of securities market participants;

(c) software for electronically receiving information from a first securities market participant'"'"'s computer;

(d) software for electronically storing said information received from said first securities market participant'"'"'s computer;

(e) software for producing a targeted dissemination list of securities market participants based on said confidential trading interest information of securities market participants and said information received from said first securities market participant'"'"'s computer, wherein said targeted dissemination list excludes one or more market participants identified as unlikely to take the contra side to a specified trade and likely to use said information received from said first securities market participant'"'"'s computer in a manner that would affect the price or availability of said security; and

(f) software for electronically transmitting to the securities market participants on said targeted dissemination list data based on said information received from said first securities market participant'"'"'s computer;

(g) software for electronically receiving subsequent orders from securities market participants in response to said transmitted data;

(h) software for conducting an electronic auction among orders including said orders received in response to said transmitted data; and

(i) software for electronically transmitting the status of orders to the respective securities market participants who initiated them.

39. The program of claim 38 wherein said information from said first securities market participant'"'"'s computer includes auction parameters.

40. The program of claim 38 wherein said information received from said first securities market participant'"'"'s computer includes specific dissemination parameters.

41. The program of claim 40 wherein said specific dissemination parameters include certified trading interest requirements.

42. The program of claim 38 wherein said data including confidential trading interest information of securities market participants includes information regarding investment holdings.

43. The program of claim 38 wherein rules governing said electronic auction grant to said first order execution priority over said subsequent orders.

44. The program of claim 38 wherein rules governing said electronic auction prevent the matching of said subsequent orders and an order other than said first order until said first order is canceled or filled.

45. A method of evaluating a securities market participant'"'"'s trading activities, comprising the steps of:

(a) electronically receiving data regarding a first securities market participant, wherein said data comprises certified trading activity information and information describing numbers of shares of a specified security bought and sold by said first securities market participant during a specified time period;

(b) electronically storing said received data regarding said first securities market participant;

(c) producing a measure of said first securities market participant'"'"'s trading activity with respect to a standard, wherein said measure is based at least in part on a net change in said first securities market participant'"'"'s position as determined by subtracting number of said shares of said specified security sold during said specified time period from number of said shares purchased during said specified time period;

(d) electronically storing said measure;

(e) electronically receiving a request from said first securities market participant to have a report transmitted to a second securities market participant, wherein said report comprises said measure;

(f) electronically storing said received request; and

(g) electronically transmitting said requested report to said second securities market participant.

46. The method of claim 45 wherein said standard is based at least in part on how accurate said non-certified trading information disseminated by said securities market participant has been.

47. The method of claim 45 wherein said standard is based at least in part on compliance with trading restraints agreed to by said securities market participant, wherein said trading restraints comprise one or more agreements, agreed to before a specified trade occurred, specifying that the securities market participant would not trade in that security for the remainder of the day on which said specified trade occurred.

48. The method of claim 45 wherein said standard is based at least in part on system-defined inappropriate trading behavior known to affect price or availability of securities.

49. The method of claim 48, wherein said inappropriate trading behavior comprises front running or peg gaming.

50. The method of claim 48, wherein said inappropriate trading behavior comprises trade breaks.

51. The method of claim 45, wherein said received data regarding said first securities market participant comprises confidential information provided by said first securities market participant in order to receive better prices on future trades or more order flow.

52. The method of claim 45, wherein said measure is based at least in part on percent divergence between disclosed and actual trading activity of said first securities market participant.

53. The method of claim 45, wherein said measure is based at least in part on percent divergence between stated trading cap and actual trading activity of said first securities market participant.

54. A computer program, stored in a computer memory, for evaluating a securities market participant'"'"'s trading activities, comprising:

(a) software for electronically receiving data regarding a first securities market participant, wherein said data comprises certified trading activity information and information describing numbers of shares of a specified security bought and sold by said first securities market participant during a specified time period;

(b) software for electronically storing said received data regarding said first securities market participant;

(c) software for producing a measure of said first securities market participant'"'"'s trading activity with respect to a standard, wherein said measure is based at least in part on a net change in said first securities market participant'"'"'s position as determined by subtracting number of said shares of said specified security sold during said specified time period from number of said shares purchased during said specified time period;

(d) software for electronically storing said measure;

(e) software for electronically receiving a request from said first securities market participant to have a report transmitted to a second securities market participant, wherein said report comprises said measure;

(f) software for electronically storing said received request; and

(g) software for electronically transmitting said requested report to said second securities market participant.

55. The program of claim 54 wherein said standard is based at least in part on how accurate said non-certified trading information disseminated by said securities market participant has been.

56. The program of claim 54 wherein said standard is based at least in part on compliance with trading restraints set agreed to by said securities market participant, wherein said trading restraints comprise one or more agreements, agreed to before a specified trade occurred, specifying that the securities market participant would not trade in that security for the remainder of the day on which said specified trade occurred.

57. The program of claim 54 wherein said standard is based at least in part on system-defined inappropriate trading behavior known to affect price or availability of securities.

58. A method of managing securities market information, comprising the steps of:

(1) enabling a first securities market participant to target dissemination of trading interests to only those other securities market participants likely to have a significant contra-interest, wherein said enabling comprises, for each order placed by said first securities market participant, creating a targeted dissemination list and ensuring that securities market participants not listed on said targeted dissemination list from receive no information regarding said order;

(2) enabling securities market participants to ensure that other securities market participants'"'"' disseminated trading interests are validated as legitimate; and

(3) enabling auctions among trading interests targeted and validated as in the preceding steps.