System and method for electronic spread trading in real and synthetically generated markets

• US 7,734,532 B2
• Filed: 05/02/2006
• Issued: 06/08/2010
• Est. Priority Date: 12/04/2003
• Status: Active Grant

• Current Assignee: Trading Technologies International, Inc.
• Original Assignee: Trading Technologies International, Inc.
• Inventors: Fishbain, Michael L.
• Primary Examiner(s): Karmis; Stefanos
• Application Number:
  US11/415,959
• Publication Number:
  US 20060287944A1
• Time in Patent Office: 1,498 Days
• Field of Search: 705 35- 37
• 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 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system and method are provided to analyze synthetic and real markets that offer interchangeable tradeable objects to find market opportunities that a trader may capitalize on. A synthetic market is an electronic market created out of real markets by a computer terminal or gateway. A real market is an electronic market that is offered by an electronic exchange. If a desirable market opportunity is found, the preferred embodiments can take action such as by sending orders to either one of the markets, or by sending orders to both markets. An advantage of the preferred embodiments, among many others, is that they can make “invisible” trading opportunities more readily apparent.

Claims

1. A computer-based method for use by a trader in an electronic trading system that includes at least one computer terminal connected over a network to at least one electronic exchange, the method comprising:

receiving by a computing device a command to buy or sell a spread, wherein the spread is associated with a first real market and a second real market, and wherein the first and second real markets are offered by at least one electronic exchange;

determining by the computing device a plurality of spread markets that offer interchangeable tradeable objects, wherein a first spread market of the plurality of spread markets is a synthetic spread market that is generated outside of an electronic exchange and associated with the first real market and the second real market, and wherein a second spread market of the plurality of spread markets is an exchange-provided spread market that is also associated with the first real market and the second real market;

determining by the computing device a first price for which the spread can be bought or sold in the first spread market and a second price for which the spread can be bought or sold in the second spread market;

in response to receiving the command, determining by the computing device whether to buy or sell in the first spread market, buy or sell in the second spread market, or buy or sell in both the first and second spread markets based on the determined first price and the determined second price, and responsively;

sending by the computing device a first spread market order for at least one of the first and second real markets when it is determined to buy or sell in the first spread market,

sending by the computing device a second spread market order for the exchange-provided spread market when it is determined to buy or sell in the second spread market, or

sending by the computing device the first spread market order for at least one of the first and second real markets and sending by the computing device the second spread market order to the exchange-provided spread market when it is determined to buy or sell in both the first and second spread markets.

2. The method of claim 1, further comprising:

receiving a first data feed from an electronic exchange for the first real market;

receiving a second data feed from an electronic exchange for the second real market; and

receiving a third data feed from an electronic exchange for the exchange-provided spread market.

3. The method of claim 2, further comprising:

generating the synthetic spread market from the first and second data feeds.

4. The method of claim 1, wherein at least one of the first price and the second price is determined based on a quantity available.

5. The method of claim 1, wherein the command is a manual instruction from a user input device.

6. The method of claim 1, wherein the command is an automatic instruction from an automated trading tool.

7. A computer readable medium containing program instructions for causing a microprocessor to execute a method comprising:

receiving by a computing device a command to buy or sell a spread, wherein the spread is associated with a first real market and a second real market, and wherein the first and second real markets are offered by at least one electronic exchange;

determining by the computing device a plurality of spread markets that offer interchangeable tradeable objects, wherein a first spread market of the plurality of spread markets is a synthetic spread market that is generated outside of an electronic exchange and associated with the first real market and the second real market, and wherein a second spread market of the plurality of spread markets is an exchange-provided spread market that is also associated with the first real market and the second real market;

determining by the computing device a first price for which the spread can be bought or sold in the first spread market and a second price for which the spread can be bought or sold in the second spread market;

in response to receiving the command, determining by the computing device whether to buy or sell in the first spread market, buy or sell in the second spread market, or buy or sell in both the first and second spread markets based on the determined first price and the determined second price, and responsively;

sending by the computing device a first spread market order for at least one of the first and second real markets when it is determined to buy or sell in the first spread market,

sending by the computing device a second spread market order for the exchange-provided spread market when it is determined to buy or sell in the second spread market, or

sending by the computing device the first spread market order for at least one of the first and second real markets and sending by the computing device the second spread market order to the exchange-provided spread market when it is determined to buy or sell in both the first and second spread markets.

8. The computer readable medium of claim 7, further comprising:

receiving a first data feed from an electronic exchange for the first real market;

receiving a second data feed from an electronic exchange for the second real market; and

receiving a third data feed from an electronic exchange for the exchange-provided spread market.

9. The computer readable medium of claim 8, further comprising:

generating the synthetic spread market from the first and second data feeds.

10. The computer readable medium of claim 7, wherein at least one of the first price and the second price is determined based on a quantity available.

11. The computer readable medium of claim 7, wherein the command is a manual instruction from a user input device.

12. The computer readable medium of claim 7, wherein the command is an automatic instruction from an automated trading tool.