Systems and methods for trading

• US 7,392,214 B1
• Filed: 04/19/2000
• Issued: 06/24/2008
• Est. Priority Date: 04/30/1999
• Status: Expired due to Fees

• Current Assignee: BGC Partners LP (BGC Group, Inc.)
• Original Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Inventors: Lutnick, Howard W., Ginsberg, Philip M., Gilbert, Andrew C., Kirwin, Glenn D., Williams, Michael E., Fraser, Stuart A.
• Primary Examiner(s): Dass; Harish T
• Application Number:
  US09/553,423
• Time in Patent Office: 2,988 Days
• Field of Search: 705/64, 705 35- 38, 705/75, 705/76, 705/44, 705/1, 713/191, 364/408, 379/114.01
• 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

The present invention is systems and methods for trading. In accordance with these systems and methods, a plurality of trader work stations that are connected to a central server may be provided. Through the work stations and central server, the systems and methods may perform participant qualification, instrument creation, bid/offer entry and response, when hit and take, workup, price retention, price improvement, request for market, bid/off restoration, price generation, position conversion, marking to market, and delivery functions.

Claims

1. An apparatus comprising at least one computing device having control logic associated therewith that when executed makes the computing device operable to:

apply a host qualification test to a party with respect to a market;

determine that the party passed the host qualification test;

apply a third party qualification test to the party, in which to apply the third party qualification test comprises to;

determine for each of a plurality of participants in the market a minimum credit ranking that a counterparty must have in order to trade with the respective participant in the market;

compare a credit ranking of the party to the participants'"'"' minimum credit rankings; and

determine that the party'"'"'s credit ranking is insufficient for the party to trade with at least one of the participants in the market; and

prevent the party from placing orders in the market based at least in part on determining that the party'"'"'s credit ranking is insufficient for the party to trade with at least one of the participants in the market.

2. The apparatus of claim 1, in which the control logic, that when executed, makes the computing device further operable to:

bypass applying the third party qualification test to the party based at least in part on determining that the party passed the host qualification test; and

allow the party to place orders in the market based at least in part on determining that the party passed the host qualification test.

3. The apparatus of claim 1, in which the control logic, that when executed, makes the computing device further operable to:

determine that the party'"'"'s credit ranking is sufficient for the party to trade with the participants in the market; and

allow the party to place orders in the market based at least in part on determining that the party'"'"'s credit ranking is sufficient for the party to trade with the participants in the market.

4. The apparatus of claim 3, in which the control logic, that when executed, makes the computing device further operable to:

monitor activity by the party in the market; and

based at least in part on the activity by the party in the market, dynamically update the party'"'"'s credit ranking.

5. The apparatus of claim 4, in which the control logic, that when executed, makes the computing device further operable to:

compare the party'"'"'s updated credit ranking to the participants'"'"' minimum credit rankings; and

determine that the party'"'"'s updated credit ranking is insufficient for the party to trade with at least one of the participants in the market.

6. The apparatus of claim 5, in which the control logic, that when executed, makes the computing device further operable to prevent the party from placing further orders in the market based at least in part on determining that the party'"'"'s updated credit ranking is insufficient for the party to trade with at least one of the participants in the market.

7. The apparatus of claim 4, in which the control logic, that when executed, makes the computing device further operable to:

establish at least one credit limit for the party based at least in part on the party'"'"'s credit ranking; and

update the at least one credit limit for the party based at least in part on the party'"'"'s updated credit ranking.

8. The apparatus of claim 4, in which to dynamically update the party'"'"'s credit ranking comprises to dynamically update the party'"'"'s credit ranking based on at least one of:

a measure of a number of trades made by the party in the market;

a measure of an amount of trades made by the party in the market;

a measure of volatility in the market;

a measure of a range of prices in the market; and

a measure of volume in the market.

9. The method apparatus of claim 3, in which the control logic, that when executed, makes the computing device further operable to:

determine that the party is qualified to trade with a first participant that is qualified to trade with a second participant; and

qualify the party to trade with the second participant based at least in part on determining that the party is qualified to trade with the first participant.

10. The apparatus of claim 3, in which to apply the host qualification test to the party and to apply the third party qualification test to the party are performed once when the party first enters the market.

11. The apparatus of claim 3, in which the control logic, that when executed, makes the computing device further operable to dynamically apply the third party qualification test to the party as the party trades in the market.

12. The apparatus of claim 11, in which to dynamically apply the third party qualification test to the party comprises to update the party'"'"'s credit ranking as the party trades in the market based at least in part on activity by the party in the market.

13. The apparatus of claim 12, in which to dynamically apply the third party qualification test to the party comprises to:

compare the party'"'"'s updated credit ranking to the participants'"'"' minimum credit rankings; and

determine that the party'"'"'s updated credit ranking is insufficient for the party to trade with at least one of the participants in the market.

14. The apparatus of claim 13, in which the control logic, that when executed, makes the computing device further operable to prevent the party from placing further orders in the market based at least in part on determining that the party'"'"'s updated credit ranking is insufficient for the party to trade with at least one of the participants in the market.

15. The apparatus of claim 12, in which the control logic, that when executed, makes the computing device further operable to:

establish at least one credit limit credit limit for the party based at least in part on the party'"'"'s credit ranking; and

update the at least one credit limit for the party based at least in part on the party'"'"'s updated credit ranking.

16. The apparatus of claim 3, in which the control logic, that when executed, makes the computing device further operable to establish at least one credit limit for the party based at least in part on the party'"'"'s credit ranking.

17. The apparatus of claim 16, in which the control logic, that when executed, makes the computing device further operable to disallow at least in part a trade by the party when the trade causes the credit limit to be exceeded.

18. The apparatus of claim 16, in which the control logic, that when executed, makes the computing device further operable to send an alerting message when the party is approaching the credit limit.

19. The method apparatus of claim 3, in which the control logic, that when executed, makes the computing device further operable to establish a credit limit for the party with at least one of the plurality of participants.

20. The apparatus of claim 3, in which the control logic, that when executed, makes the computing device further operable to:

apply a measure to one or more trades by the party to mark the trades to market; and

use data related to the marked to market trades to dynamically update the party'"'"'s credit ranking.

21. The apparatus of claim 20, in which the control logic, that when executed, makes the computing device further operable to:

compare the party'"'"'s updated credit ranking to the participants'"'"' minimum credit rankings; and

determine that the party'"'"'s updated credit ranking is insufficient for the party to trade with at least one of the participants in the market.

22. The apparatus of claim 21, in which the control logic, that when executed, makes the computing device further operable to prevent the party from placing further orders in the market based at least in part on determining that the party'"'"'s updated credit ranking is insufficient for the party to trade with at least one of the participants in the market.

23. The apparatus of claim 20, in which the measure is an average weighted price of trades in the market.

24. The apparatus of claim 1, in which the market is for trading a currency instrument.

25. An apparatus comprising at least one computing device having control logic associated therewith that when executed makes the computing device operable to:

determine at least one credit ranking for a party;

determine for at least a first participant in a market a minimum credit ranking that a counterparty must have in order to trade with the first participant in the market;

compare the party'"'"'s credit ranking to the first participant'"'"'s minimum credit ranking;

determine that the party'"'"'s credit ranking is insufficient for the party to trade with the first participant in the market; and

prevent the party from placing orders in the market based at least in part on determining that the party'"'"'s credit ranking is insufficient for the party to trade with the first participant in the market.

26. The apparatus of claim 25, in which the control logic, that when executed, makes the computing device further operable to:

determine that the party'"'"'s credit ranking is sufficient for the party to trade with the first participants in the market; and

allow the party to place orders in the market based at least in part on determining that the party'"'"'s credit ranking is sufficient for the party to trade with the first participants in the market.

27. The apparatus of claim 26, in which the control logic, that when executed, makes the computing device further operable to:

monitor activity by the party in the market; and

based at least in part on the activity by the party in the market, dynamically update the party'"'"'s credit ranking.

28. The apparatus of claim 27, in which the control logic, that when executed, makes the computing device further operable to:

compare the party'"'"'s updated credit ranking to the first participant'"'"'s minimum credit ranking;

determine that the party'"'"'s updated credit ranking is insufficient for the party to trade with the first participant in the market; and

prevent the party from placing further orders in the market based at least in part on determining that the party'"'"'s updated credit ranking is insufficient for the party to trade with the first participant in the market.

29. An apparatus comprising at least one computing device having control logic associated therewith that when executed makes the computing device operable to:

monitor activity by a party in a market;

based at least in part on the activity by the party in the market, update at least one credit ranking for the party;

determine for at least a first participant in the market a minimum credit ranking that a counterparty must have in order to trade with the first participant in the market;

compare the party'"'"'s updated credit ranking to the first participant'"'"'s minimum credit ranking;

determine that the party'"'"'s updated credit ranking is insufficient for the party to trade with the first participant in the market; and

prevent the party from placing further orders in the market based at least in part on determining that that the party'"'"'s updated credit ranking is insufficient for the party to trade with the first participant in the market.