Pass through liquidity in a multi-tiered trading system and method

• US 7,840,478 B1
• Filed: 01/12/2006
• Issued: 11/23/2010
• Est. Priority Date: 11/17/2004
• Status: Expired due to Fees

• Current Assignee: CME Group Incorporated
• Original Assignee: ICAP Services North America LLC (TP ICAP Plc)
• Inventors: Cleaves, Daniel O., Purpora, Ronald A.
• Primary Examiner(s): Patel; Jagdish N
• Assistant Examiner(s): CHANDLER, SARA M
• Application Number:
  US11/332,669
• Time in Patent Office: 1,776 Days
• Field of Search: 705/26, 705/37
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

The present invention generally relates to brokerage systems and methods, and more particularly, to a multi-tiered trading system and corresponding methods which allow multiple customers and multiple dealers to transact on a single platform while maintaining the distinction of an inter-dealer system and a dealer-customer relationship.

Claims

1. An electronic trading system in communication with a plurality of dealers and a plurality of customers to provide said customers with conditional access to an inter-dealer exchange utilized by said dealers to facilitate the trading of financial instruments, the system comprising:

a central computer including a memory, the memory configured to store an auto trading profile for a customer of the plurality of customers, said auto trading profile including one or more of a minimum customer order size, a maximum customer order size, or one or more customer order price parameters for a financial instrument;

the central computer configured to;

receive a customer order for the financial instrument from the customer;

receive information on a current market for the financial instrument from the inter-dealer exchange;

compare said customer order to the current market for the financial instrument within the inter-dealer exchange;

automatically decide for a first dealer from the plurality of dealers as to whether to fill said customer order directly or to send all or part of said customer order to said inter-dealer exchange based on said comparison and said auto trading profile;

fill all or part of said customer order directly or send all or part of said customer order to said inter-dealer exchange based on the automatic decision;

when all or part of said customer order is sent to said inter-dealer exchange, communicate said all or part of said customer order to said inter-dealer exchange in a manner such that a second dealer within said inter-dealer exchange appears to be transacting with said first dealer and not said customer when filling said all or part of said customer order.

2. The system of claim 1, wherein said central computer provides a notice to said first dealer as to whether to choose to fill all or part of said customer order directly or to send all or part of said customer order to said inter-dealer exchange based on said comparison result and said auto trading profile.

3. The system of claim 2, wherein said notice to said first dealer is configured such that the first dealer must choose to fill all or part of said customer order directly or to send all or part of said customer order to said interdealer exchange within a predetermined period after receipt of said notice, and, if said first dealer does not choose within said predetermined period, said central computer is configured to automatically decide for said first dealer as to whether to fill all or part of said customer order directly or to send all or part of said customer order to said inter-dealer exchange based on said comparison result and said auto trading profile.

4. The system of claim 3, wherein said predetermined period is based on said auto profile.

5. The system of claim 1, wherein said customer profile including one or more of a customer name, a customer location, a customer trader, and one or more financial instruments authorized for said customer orders.

6. The system of claim 1, wherein said customer is registered to use said system by a plurality of said dealers, and wherein said memory includes an indication of a priority among said plurality of said dealers by which said customer was registered.

7. The system of claim 1, wherein said memory includes a rule set for each of two or more of said customers, said rule set including one or more of a financial instrument type, an order size, a customer identification, or a time of day when said customer order was entered.

8. The system of claim 7, wherein said rule set is configured to be modified in real-time.

9. The system of claim 7, wherein said central computer is configured to enable said first dealer to fill all or part of said customer order directly or to send all or part of said customer order to said inter-dealer exchange based on said comparison result and said rule set.

10. The system of claim 7, wherein said central computer is configured to automatically filter and organize multiples of said customer orders based on said rule set for each said customer.