Systems and methods for electronic trading that provide incentives and linked auctions

• US 7,401,044 B1
• Filed: 06/14/2000
• Issued: 07/15/2008
• Est. Priority Date: 06/15/1999
• Status: Expired due to Fees

• Current Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Original Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Inventors: Lutnick, Howard W., Ginsberg, Philip M., Kirwin, Glenn D., Fraser, Stuart A.
• Primary Examiner(s): Subramanian; Narayanswamy
• Application Number:
  US09/593,554
• Time in Patent Office: 2,953 Days
• Field of Search: 705 35- 37, 705/14, 382/139
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0222 During e-commerce, i.e. online transactions
• CPC Class Codes: G06Q 30/0231 Awarding of a frequent usage incentive independent of the monetary value of a good or service purchased, or distance travelled
• CPC Class Codes: G06Q 30/0235 constrained by time limit or expiration date
• 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 99/00 Subject matter not provided for in other groups of this subclass

Abstract

Systems and methods for electronic trading that provide incentives for gathering orders, making markets, and submitting block orders are provided. These systems and methods may first determine if the trader qualifies for an incentive. This determination may be made based upon one or more characteristics, such as price, size, duration, etc., of orders submitted to the trading system by the trader. Once the trader has been determined as being eligible for one or more incentives, the incentives that are provided may include reduced transaction costs, cash payments, priority or exclusivity in trading, self execution of transactions, etc.

Claims

1. An apparatus comprising:

a processor; and

a memory that stores instructions, in which each of the instructions is executable by the processor and includes;

instructions that direct the processor to apply a test to a plurality of orders that are submitted by a trader, in which the test is based on a volume of the plurality of orders;

instructions that direct the processor to determine, based on a first result from the applied test, that the trader qualifies for an incentive, in which the incentive comprises executing orders that are submitted by the trader before executing orders that are submitted by at least one other trader, in which the trader'"'"'s orders are submitted after the other trader'"'"'s orders have been submitted, and the incentive expires after a period of time;

instructions that direct the processor to receive a first order that is submitted by the trader before the period of time has expired, in which the first order is received after a second order that is submitted by the other trader has been received;

instructions that direct the processor to execute the first order before executing the second order;

after the period of time has expired, instructions that direct the processor to apply the test to the plurality of orders that are submitted by the trader;

instructions that direct the processor to determine, based on a second result from the applied test, that the trader does not qualify for the incentive;

instructions that direct the processor to receive a third order that is submitted by the trader after the period of time has expired;

instructions that direct the processor to receive a plurality of orders that are submitted by the other trader after the period of time has expired; and

instructions that direct the processor to execute the third order and the other trader'"'"'s plurality of orders in order of receipt.

2. The apparatus of claim 1, in which the test comprises:

calculating a size of the plurality of orders that are submitted by the trader; and

determining that the calculated size exceeds a first value.

3. The apparatus of claim 1, in which the test comprises:

calculating a duration of the plurality of orders that are submitted by the trader; and

determining that the calculated duration exceeds a second value.

4. The apparatus of claim 1, in which the test comprises:

calculating a quantity of cancellations that are submitted by the trader, in which each cancellation corresponds to an order that was previously submitted by the trader; and

determining that the quantity does not exceed a third value.

5. The apparatus of claim 1, in which each of the instructions further includes:

instructions that direct the processor to evaluate a likelihood of the trader to default on a loan;

instructions that direct the processor to assign a credit rating to the trader based on the calculated likelihood; and

instructions that direct the processor to determine that the credit rating exceeds a minimum value.

6. The apparatus of claim 1, in which each of the instructions further includes:

instructions that direct the processor to provide, concurrently, the incentive to the trader and a second incentive to a second trader.

7. The apparatus of claim 1, in which each of the instructions further includes:

instructions that direct the processor to notify the trader, in real-time, that at least one incentive has been earned.

8. The apparatus of claim 1, in which each of the instructions further includes:

instructions that direct the processor to wait to execute the second order after the period of time has expired.

9. The apparatus of claim 1, in which each of the instructions further includes:

instructions that direct the processor to receive a fourth order that is submitted by the other trader after the period of time has expired, in which the fourth order is received before the third order has been received; and

instructions that direct the processor to execute the fourth order before executing the third order.

10. The apparatus of claim 1, in which the test comprises:

calculating a quantity of orders that are submitted by the trader after a first time interval and before a second time interval; and

determining that the quantity exceeds a fourth value.

11. The apparatus of claim 1, in which the first order comprises a bid that is submitted in response to an offer, in which the bid comprises a first price and the offer comprises a second price.

12. The apparatus of claim 11, in which each of the instructions further includes:

instructions that direct the processor to calculate a difference between the first price and the second price; and

instructions that direct the processor to determine that the difference does not exceed a fifth value.

13. An article of manufacture comprising:

a storage medium, in which the storage medium stores instructions, which when executed by a processor, direct the processor to;

apply a test to a plurality of orders that are submitted by a trader, in which the test is based on a volume of the plurality of orders;

determine, based on a first result from the applied test, that the trader qualifies for an incentive, in which the incentive comprises executing orders that are submitted by the trader before executing orders that are submitted by at least one other trader, in which the trader'"'"'s orders are submitted after the other trader'"'"'s orders have been submitted, and the incentive expires after a period of time;

receive a first order that is submitted by the trader before the period of time has expired, in which the first order is received after a second order that is submitted by the other trader has been received;

execute the first order before executing the second order;

after the period of time has expired, apply the test to the plurality of orders that are submitted by the trader;

determine, based on a second result from the applied test, that the trader does not qualify for the incentive;

receive a third order that is submitted by the trader after the period of time has expired;

receive a plurality of orders that are submitted by the other trader after the period of time has expired; and

execute the third order and the other trader'"'"'s plurality of orders in order of receipt.

14. The article of manufacture of claim 13, in which the test comprises:

calculating a size of the plurality of orders that are submitted by the trader; and

determining that the calculated size exceeds a first value.

15. The article of manufacture of claim 13, in which the test comprises:

calculating a duration of the plurality of orders that are submitted by the trader; and

determining that the calculated duration exceeds a second value.

16. The article of manufacture of claim 13 in which the test comprises:

calculating a quantity of cancellations that are submitted by the trader, in which each cancellation corresponds to an order that was previously submitted by the trader; and

determining that the quantity does not exceed a third value.

17. The article of manufacture of claim 13, in which the storage medium further stores instructions, which when executed by the processor, direct the processor to:

evaluate a likelihood of the trader to default on a loan;

assign a credit rating to the trader based on the calculated likelihood; and

determine that the credit rating exceeds a minimum value.

18. The article of manufacture of claim 13, in which the storage medium further stores instructions, which when executed by the processor, direct the processor to:

wait to execute the second order after the period of time has expired.

19. The article of manufacture of claim 13, in which the storage medium further stores instructions, which when executed by the processor, direct the processor to:

receive a fourth order that is submitted by the other trader after the period of time has expired, in which the fourth order is received before the third order has been received; and

execute the fourth order before executing the third order.

20. The article of manufacture of claim 13, in which the test comprises:

calculating a quantity of orders that are submitted by the trader after a first time interval and before a second time interval; and

determining that the quantity exceeds a fourth value.

21. The article of manufacture of claim 13, in which the first order comprises a bid that is submitted in response to an offer, in which the bid comprises a first price and the offer comprises a second price.

22. The article of manufacture of claim 21, in which the storage medium further stores instructions, which when executed by the processor, direct the processor to:

calculate a difference between the first price and the second price; and

determine that the difference does not exceed a fifth value.

23. The article of manufacture of claim 13, in which the storage medium further stores instructions, which when executed by the processor, direct the processor to:

provide, concurrently, the incentive to the trader and a second incentive to a second trader.

24. The article of manufacture of claim 13, in which the storage medium further stores instructions, which when executed by the processor, direct the processor to:

notify the trader, in real-time, that at least one incentive has been earned.

25. An electronic trading system comprising:

at least one computing workstation coupled to a central processing unit via a network, wherein the central processing unit is configured to;

apply a test to a plurality of orders that are submitted by a trader, in which the test is based on a volume of the plurality of orders;

determine, based on a first result from the applied test, that the trader qualifies for an incentive, in which the incentive comprises executing orders that are submitted by the trader before executing orders that are submitted by at least one other trader, in which the trader'"'"'s orders are submitted after the other trader'"'"'s orders have been submitted, and the incentive expires after a period of time;

receive a first order that is submitted by the trader before the period of time has expired, in which the first order is received after a second order that is submitted by another trader has been received;

execute the first order before executing the second order;

apply, after the period of time has expired, the test to the plurality of orders that are submitted by the trader;

determine, based on a second result from the applied test, that the trader does not qualify for the incentive;

receive a third order that is submitted by the trader after the period of time has expired;

receive a plurality of orders that are submitted by the other trader after the period of time has expired; and

execute the third order and the other trader'"'"'s plurality of orders in order of receipt.

26. The system of claim 25, in which the test comprises:

calculating a size of the plurality of orders that are submitted by the trader; and

determining that the calculated size exceeds a first value.

27. The system of claim 25, in which the test comprises:

calculating a duration of the plurality of orders that are submitted by the trader; and

determining that the calculated duration exceeds a second value.

28. The system of claim 25, in which the test comprises:

calculating a quantity of cancellations that are submitted by the trader, in which each cancellation corresponds to an order that was previously submitted by the trader; and

determining that the quantity does not exceed a third value.

29. The system of claim 25, in which the central processing unit is further configured to:

evaluate a likelihood of the trader to default on a loan;

assign a credit rating to the trader based on the calculated likelihood; and

determine that the credit rating exceeds a minimum value.

30. The system of claim 25, in which the central processing unit is further configured to:

wait to execute the second order after the period of time has expired.

31. The system of claim 25, in which the central processing unit is further configured to:

receive a fourth order that is submitted by the other trader after the period of time has expired, in which the fourth order is received before the third order has been received; and

execute the fourth order before executing the third order.

32. The system of claim 25, in which the test comprises:

calculating a quantity of orders that are submitted by the trader after a first time interval and before a second time interval; and

determining that the quantity exceeds a fourth value.

33. The system of claim 25, in which the first order comprises a bid that is submitted in response to an offer, in which the bid comprises a first price and the offer comprises a second price.

34. The system of claim 33, in which the central processing unit is further configured to:

calculate a difference between the first price and the second price; and

determine that the difference does not exceed a fifth value.

35. The system of claim 25, in which the central processing unit is further configured to:

provide, concurrently, the incentive to the trader and a second incentive to a second trader.

36. The system of claim 25, in which the central processing unit is further configured to:

notify the trader, in real-time, that at least one incentive has been earned.