Price improvement in an active trading market

• US 7,574,395 B2
• Filed: 06/11/2002
• Issued: 08/11/2009
• Est. Priority Date: 06/11/2002
• Status: Expired due to Fees

• Current Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Original Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Inventors: Sweeting, Michael
• Primary Examiner(s): Poinvil; Frantzy
• Assistant Examiner(s): Graham; Clement B.
• Application Number:
  US10/171,009
• Publication Number:
  US 20060229967A1
• Time in Patent Office: 2,618 Days
• Field of Search: 705/37, 705/36, 705/38
• US Class Current: 705/37
• 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

Systems and methods for providing traders an opportunity to improve prices for an item trading in an active market are provided. After a trader HITS or LIFTS a bid or offer, a market becomes active. When the market is active, traders can submit orders that improve on the price of the current market price of an item. Whenever a price improvement order is currently available for use in a transaction order, a price improvement indicator is displayed to indicate to other traders that price improvement is occurring. When a price improvement order is used to fill a transaction order, a portion of the difference between the market price and the price improvement price may be divided between the trader associated with the price improvement order, the trader associated with the transaction order, and the system host.

Claims

1. A method for providing price improvement on an item being traded in an active market, wherein said active market is a market where said item is actively being traded, said method comprising:

providing a touch price for said item;

electronically receiving at least one price-improved order having a price and a size, wherein said at least one price-improved order improves on said touch price;

displaying a price improvement indicator while said at least one price-improved order is available for trade in said active market;

prioritizing each said at least one price-improved order based on predetermined criteria;

receiving at least one transaction order, wherein said at least one transaction order is an order to buy or sell said item;

filling said at least one transaction order based on the prioritization of said at least one price-improved order; and

electronically distributing at least a portion of the difference between said touch price and said price of

said at least one price-improved order used to fill said at least one transaction order to;

a trader associated with said at least one price-improved order;

a trader associated with said at least one transaction order; and

a system host.

2. A method comprising the steps of:

in an electronic trading system designed to trade financial instruments, generating data designed to cause presentation to traders of one or more orders in a form executable by the traders to whom the orders are presented, the presented orders being orders to buy and/or sell a financial instrument at a specified price in a specified quantity, the electronic trading system establishing a standard price increment by which prices of orders differ;

receiving a price-improved order from a trader, the price-improved order being either (a) an offer to sell at price lower than the best offer to sell currently presented with a price and quantity, or (b) a bid to buy at a price higher than the best bid to buy currently presented with a price and quantity; and

distributing data for presentation to traders, the distributed data indicating the availability of the price-improved order to be traded, but withholding the precise price of the price-improved order.

3. The method of claim 2, wherein the price-improved order includes a specified quantity for said item.

4. The method of claim 3, wherein the quantity for the price-improved order is presented to the traders to whom the price-improved order is presented.

5. The method of claim 2, wherein the price-improved order has a price set relative to a price of an order at a standard-increment price currently pending.

6. The method of claim 2, further comprising:

providing an opportunity to enter a price-improved order into the electronic trading system to only traders that entered a previous order that has been executed, the opportunity being open within a specified time after execution of the previous order.

7. The method of claim 2, further comprising the step of:

for a period of time following execution of the price-improved order, providing priority rights to a trader of a transaction executed on the price-improved order, the priority right providing an opportunity to temporarily stop orders from executing while the trader with the priority right has an exclusive opportunity to submit a new order.

8. The method of claim 2, further comprising the step of:

allowing a trader to submit the price-improved order at a variable price that floats at a user-determined increment relative to the best offer or best bid then pending during the time the price-improved order remains available to be traded.

9. The method of claim 2, wherein

the price-improved order is at a price improved relative to another price-improved order that is at a price outside the standard price increment.

10. The method of claim 2, wherein said predetermined price improvement level comprises a level that improves on the price of the last-executed transaction by a user-defined quantity.

11. The method of claim 2, wherein the price-improved order includes an increase in bid purchase price relative to a previously-executed transaction.

12. The method of claim 2, wherein the price-improved order includes a decrease in offered sale price relative to a previously-executed transaction.

13. The method of claim 2, wherein the price-improved order improves on a price by offering a decreased offer price relative to a pending offer to sell.

14. The method of claim 2 further comprising the step of:

validating the price-improved order by comparing its price to a price of a recently-executed transaction.

15. The method of claim 2, wherein:

the price-improved order is at a price different from the best offer or best bid pending at the time the price-improved order is entered by an amount smaller than the standard price increment.

16. The method of claim 2 further comprising the step of:

displaying a visual price improvement indicator on a video screen of a trader to whom the price-improved order is presented, the visual price-improvement indicator being designed to indicate to the trader that the price-improved order is available to be traded.

17. The method of claim 2, further comprising the step of:

prioritizing the price-improved order for execution according to price of the price-improved order.

18. The method of claim 2, further comprising the step of:

prioritizing the price-improved order for execution according to a time at which the price-improved order was received.

19. The method of claim 2 further comprising the step of:

executing a trade of the price-improved order at a price at a predetermined difference from the price of the price-improved order.

20. The method of claim 2 further comprising the step of:

removing one of said at least one price-improved order when all of said size of said at least one price-improved order is used to fill said at least one transaction order.

21. The method of claim 2, further comprising the step of:

for at least some of said price-improved orders, displaying a quantity of the at least some price-improved order.

22. A tangible memory having embedded thereon programs designed to cause a computer to:

generate data in an electronic trading system designed to trade financial instruments at prices being multiples of a standard price increment by which prices of orders differ, the data designed to cause presentation to traders of one or more orders in a form executable by the traders to whom the orders are presented, the orders to be presented being orders to buy and/or sell a financial instrument at a specified price in a specified quantity;

receive at least one price-improved order from a trader, the price-improved order having a price and a quantity, the price-improved order being either (a) an offer to sell at price lower than the best offer to sell currently presented with a price and quantity, or (b) a bid to buy at a price higher than the best bid to buy currently presented with a price and quantity; and

distribute data for presentation to traders, the distributed data indicating the availability of the price-improved order to be traded, but withholding the precise price of the price-improved order.

23. The tangible memory of claim 22, wherein the price-improved order includes a specified quantity for said item.

24. The tangible memory of claim 22, wherein the quantity for the price-improved order is presented to the traders to whom the price-improved order is presented.

25. The tangible memory of claim 22, wherein the price-improved order has a price set relative to a price of an order at a standard-increment price currently pending.

26. The tangible memory of claim 22, further comprising programs designed to cause a computer to:

provide an opportunity to enter a price-improved order into the electronic trading system to only traders that entered a previous order that has been executed, the opportunity being open within a specified time after execution of the previous order.

27. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

for a period of time following execution of the price-improved order, providing priority rights to a trader of a transaction executed on the price-improved order, the priority right providing an opportunity to temporarily stop orders from executing while the trader with the priority right has an exclusive opportunity to submit a new order.

28. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

allow a trader to submit the price-improved order at a variable price that floats at a user-determined increment relative to the best offer or best bid then pending during the time the price-improved order remains available to be traded.

29. The tangible memory of claim 22, wherein:

the price-improved order is at a price improved relative to another price-improved order that is at a price outside the standard price increment.

30. The tangible memory of claim 22, wherein:

said predetermined price improvement level comprises a level that improves on the price of the last-executed transaction by a user-defined quantity.

31. The tangible memory of claim 22, wherein:

the price-improved order includes an increase in bid purchase price relative to a previously-executed transaction.

32. The method according to claim 22, wherein:

the price-improved order includes a decrease in offered sale price relative to a previously-executed transaction.

33. The tangible memory of claim 22, wherein:

the price-improved order improves on a price by offering a decreased offer price relative to a pending offer to sell.

34. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

validate the price-improved order by comparing its price to a price of a recently-executed transaction.

35. The tangible memory of claim 22, wherein:

the price-improved order is at a price different from the best offer or best bid pending at the time the price-improved order is entered by an amount smaller than the standard price increment.

36. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

display a visual price improvement indicator on a video screen of a trader to whom the price-improved order is presented, the visual price-improvement indicator being designed to indicate to the trader that the price-improved order is available to be traded.

37. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

prioritizing the price-improved order for execution according to price of the price-improved order.

38. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

prioritizing the price-improved order for execution according to a time at which the price-improved order was received.

39. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

execute a trade of the price-improved order at a price at a predetermined difference from the price of the price-improved order.

40. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

remove one of said at least one price-improved order when all of said size of said at least one price improved order is used to fill said at least one transaction order.

41. The tangible memory of claim 22, having further embedded thereon programs designed to cause a computer to:

for at least some of said price-improved orders, display a quantity of at least some price-improved orders.