System and method for preventing cross trading

• US 7,606,748 B1
• Filed: 09/12/2002
• Issued: 10/20/2009
• Est. Priority Date: 09/12/2002
• Status: Active Grant

• Current Assignee: Trading Technologies International, Inc.
• Original Assignee: Trading Technologies International, Inc.
• Inventors: Brumfield, Harris, Owens, Farley
• Primary Examiner(s): Abdi; Kambiz
• Assistant Examiner(s): Merchant; Shahid R
• Application Number:
  US10/242,062
• Time in Patent Office: 2,595 Days
• Field of Search: 705/37, 705/35, 705/36.R
• US Class Current: 705/35
• 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 40/06 Asset management; Financial planning or analysis

Abstract

Information regarding the current state in the market is used to prevent orders from crossing. In an example provided herein, when an order is entered into a market, information regarding current positions in the market is taken into account to determine whether the order will cross with other orders. If the orders would cross, appropriate action is taken to prevent the crossing of orders in a way suitable for the person or persons trading. The teachings described herein may be used for any reason to prevent orders from crossing. Moreover, they may be used in other areas of trading to assist the trader in obeying any other rule or regulation that might involve analyzing current positions in the market before taking action.

Claims

1. A method for preventing orders from crossing, the method comprising:

submitting by a computing device a plurality of orders for a tradeable object to an electronic exchange, wherein each order of the plurality of orders comprises an order quantity at a different price level and is on a same side, and wherein the plurality of orders are placed in an exchange order book;

receiving by the computing device a command to initiate a sweep order for the tradeable object comprising an order quantity to be sent to the electronic exchange, wherein if submitted to the electronic exchange, the sweep order would take an opposite side from the plurality of orders such that at least a portion of the order quantity for the sweep order would be matched with at least a portion of the order quantity for each of the plurality of orders;

automatically sending by the computing device a delete transaction message to the electronic exchange to delete quantity remaining in the exchange order book associated with the plurality of orders in response to receiving the command to initiate the second sweep order to prevent the plurality of orders and the sweep order from crossing at the electronic exchange, wherein the delete transaction message is sent prior to sending the sweep order;

automatically adjusting by the computing device the order quantity of the yet to be sent sweep order by subtracting from the order quantity for the sweep order the deleted quantity associated with the plurality of orders at each price level for which the sweep order is to be executed; and

submitting by the computing device the sweep order to the electronic exchange, wherein the sweep order comprises the adjusted order quantity.

2. The method of claim 1 wherein the plurality of orders are to buy the tradeable object and the sweep order is an order to sell the tradeable object.

3. The method of claim 1 wherein the plurality of orders are to sell the tradeable object and the sweep order is an order to buy the tradeable object.

4. The method of claim 1 wherein the command to initiate the sweep order is received from a user entering an order to buy or sell into a graphical user interface, and wherein the step of submitting the sweep order comprises sending an order transaction message to the electronic exchange to buy or sell the tradeable object.

7. The method of claim 1 wherein the deleted quantity associated with the plurality of orders is internally matched with quantity from the sweep order.

8. The method of claim 1, further comprising the steps of:

refraining from sending the sweep order to the electronic exchange if the sweep order quantity is less than the total order quantity of the plurality of orders;

automatically sending an instruction to delete quantity in an amount at least equal to the order quantity for the sweep order remaining in the exchange order book associated with the plurality of orders; and

internally matching the sweep order with any of the deleted quantity associated with the plurality of orders.

5. A system for preventing orders from crossing, the system comprising:

a client device programmed to execute the following;

a trading application programmed to submit a plurality of orders for a tradeable object to an electronic exchange, each order of the plurality of orders comprising an order quantity at a different price level and on a same side, wherein the plurality of orders are placed in an exchange order book, and the trading application adapted to receive a command to initiate a sweep order for the tradeable object comprising an order quantity, wherein if submitted to the electronic exchange, the sweep order would take an opposite side from the plurality of orders such that at least a portion of the order quantity for the sweep order would be matched with at least a portion of the order quantity for each of the plurality of orders; and

a crossing manager programmed to automatically send a delete transaction message to the electronic exchange to delete quantity remaining in the exchange order book associated with the plurality of orders in response to receiving a command to initiate the sweep order to prevent the plurality of orders and the sweep order from crossing at the electronic exchange, wherein the delete transaction message is sent prior to sending the sweep order, and the crossing manager adapted to automatically adjust the order quantity of the yet to be sent sweep order by subtracting from the order quantity for the sweep order the deleted quantity associated with the plurality of orders at each price level for which the sweep order is to be executed,

wherein the trading application submits the sweep order to the electronic exchange, and wherein the sweep order comprises the adjusted order quantity.

6. The system of claim 5 wherein the crossing manager is a software routine called from the trading application routine.