Systems and methods for establishing first on the follow trading priority in electronic trading systems

• US 8,229,832 B2
• Filed: 01/09/2006
• Issued: 07/24/2012
• Est. Priority Date: 01/09/2006
• Status: Active Grant

• Current Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Original Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Inventors: Lutnick, Howard W., Noviello, Joseph, Sweeting, Michael
• Primary Examiner(s): Hammond, III, Thomas M
• Assistant Examiner(s): Weis, Seth
• Application Number:
  US11/328,814
• Publication Number:
  US 20070174162A1
• Time in Patent Office: 2,388 Days
• Field of Search: 705/37
• 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

Abstract

Systems and methods for trading an item in an electronic trading system are provided. The method preferably includes transitioning the trading system from a first trading state to a second trading state. Once the trading system has transitioned to the second state, the method includes determining whether an existing order qualifies for trading priority and/or exclusivity in the second trading state with respect to an incoming contra order. This determining of trading rights in the second trading state is preferably based on the status of trading priority in the first trading state and also a set of predetermined criteria with respect to an incoming contra order in the second trading state. If the existing order qualifies for trading priority, then the system preferably presents the incoming contra order for trading exclusively or semi-exclusively to the participant associated with the existing order.

Claims

1. A method, comprising:

transitioning by at least one computing device a trading system from a first trading state to a second trading state;

determining by the at least one computing device, from among orders pending at a conclusion of the first trading state, a best order,

wherein the best order comprises an order having a best price from among the pending orders, and

wherein the best order is associated with a participant;

determining by the at least one computing device that a size of the best order satisfies a minimum size requirement;

based at least in part on (i) the participant having the best order and (ii) determining that the size of the best order satisfies the minimum size requirement, awarding by the at least one computing device to the participant a potential trading priority in the second trading state with respect to at least one contra order received in the second trading state;

receiving by the at least one computing device a contra order in the second trading state, wherein the contra order is received from a workstation coupled to the at least one computing device via a communications network;

based at least in part on awarding the participant with the potential trading priority, determining by the at least one computing device that the participant has a right to trade exclusively against the received contra order;

determining by the at least one processor that a different participant indicates a willingness to trade against the received contra order; and

based at least in part on (i) determining that the participant has the right to trade exclusively against the received contra order and (ii) determining that the different participant indicates the willingness to trade against the received contra order, automatically executing by the at least one computing device, on behalf of the participant, a trade against the received contra order.

2. The method of claim 1, further comprising:

determining by the at least one computing device that the size of the best order exceeds a predetermined percentage of a size of the received contra order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the size of the best order exceeds the predetermined percentage of the size of the received contra order.

3. The method of claim 1, further comprising:

determining by the at least one computing device that a price of the best order is within a predetermined delta of a price of the received contra order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the price of the best order is within the predetermined delta of the price of the received contra order.

4. The method of claim 1, further comprising:

determining by the at least one computing device that a size of the received contra order satisfies a further minimum size requirement; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the size of the received contra order satisfies the further minimum size requirement.

5. The method of claim 1, further comprising:

determining by the at least one computing device that a size of the received contra order exceeds a predetermined percentage of the size of the best order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the size of the received contra order exceeds the predetermined percentage of the size of the best order.

6. The method of claim 1, further comprising:

determining by the at least one computing device a price of the received contra order is within a predetermined delta of a price of the best order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the price of the received contra order is within the predetermined delta of the price of the best order.

7. The method of claim 1,

wherein the orders pending at the conclusion of the first trading state comprise bids pending at the conclusion of the first trading state;

wherein the best order comprises a bid having a best price from among the pending bids; and

wherein the received contra order comprises an offer.

8. The method of claim 1,

wherein the orders pending at the conclusion of the first trading state comprise offers pending at the conclusion of the first trading state;

wherein the best order comprises an offer having a best price from among the pending offers; and

wherein the received contra order comprises a bid.

9. The method of claim 1, further comprising:

based at least in part on awarding the participant with the potential trading priority, automatically modifying by the at least one computing device the best order, wherein modifying the best order does not affect the potential trading priority of the participant.

10. The method of claim 9, wherein modifying the best order comprises at least one of:

modifying a size of the best order, and

modifying a price of the best order.

11. The method of claim 9,

wherein the best order comprises a bid;

and

wherein modifying the best order comprises at least one of;

reducing a size of the bid, and

reducing a price of the bid.

12. The method of claim 9,

wherein the best order comprises a offer;

and

wherein modifying the best order comprises at least one of;

reducing a size of the offer, and

increasing a price of the offer.

13. The method of claim 9, wherein the at least one computing device automatically modifies the best order based at least in part on instructions preset by the participant.

14. The method of claim 9, wherein the at least one computing device automatically modifies the best order based at least in part on a preset default of the at least one computing device.

15. The method of claim 1,

wherein the best order comprises (i) a hidden size not shown to other participants and (ii) a displayed size shown to other participants;

and

wherein the hidden size and the displayed size are considered in determining that the size of the best order satisfies the minimum size requirement.

16. The method of claim 1,

wherein the best order comprises (i) a hidden size not shown to other participants and (ii) a displayed size shown to other participants;

and

wherein only the displayed is considered in determining that the size of the best order satisfies the minimum size requirement.

17. The method of claim 1, wherein the at least one computing device automatically executes the trade against the received contra order based at least in part on instructions preset by the participant.

18. The method of claim 1, wherein the at least one computing device automatically executes the trade against the received contra order based at least in part on a preset default of the at least one computing device.

19. An apparatus, comprising:

at least one processor; and

at least one memory device electronically coupled to the at least one processor, wherein the at least one memory device stores software which, when executed by the at least one processor, directs the at least one processor to;

transition a trading system from a first trading state to a second trading state;

determine, from among orders pending at a conclusion of the first trading state, a best order,

wherein the best order comprises an order having a best price from among the pending orders, and

wherein the best order is associated with a participant;

determine that a size of the best order satisfies a minimum size requirement;

based at least in part on (i) the participant having the best order and (ii) determining that the size of the best order satisfies the minimum size requirement, award to the participant a potential trading priority in the second trading state with respect to at least one contra order received in the second trading state;

receive a contra order in the second trading state, wherein the apparatus is operable to receive the contra order from a workstation via a communications network;

based at least in part on awarding the participant with the potential trading priority, determine that the participant has a right to trade exclusively against the received contra order;

determine that a different participant indicates a willingness to trade against the received contra order; and

based at least in part on (i) determining that the participant has the right to trade exclusively against the received contra order and (ii) determining that the different participant indicates the willingness to trade against the received contra order, automatically execute, on behalf of the participant, a trade against the received contra order.

20. The apparatus of claim 19, wherein the software, when executed by the at least one processor, further directs the at least one processor to:

determine that the size of the best order exceeds a predetermined percentage of a size of the received contra order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the size of the best order exceeds the predetermined percentage of the size of the received contra order.

21. The apparatus of claim 19, wherein the software, when executed by the at least one processor, further directs the at least one processor to:

determine that a price of the best order is within a predetermined delta of a price of the received contra order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the price of the best order is within the predetermined delta of the price of the received contra order.

22. The apparatus of claim 19, wherein the software, when executed by the at least one processor, further directs the at least one processor to:

determine that a size of the received contra order satisfies a further minimum size requirement; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the size of the received contra order satisfies the further minimum size requirement.

23. The apparatus of claim 19, wherein the software, when executed by the at least one processor, further directs the at least one processor to:

determine that a size of the received contra order exceeds a predetermined percentage of the size of the best order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the size of the received contra order exceeds the predetermined percentage of the size of the best order.

24. The apparatus of claim 19, wherein the software, when executed by the at least one processor, further directs the at least one processor to:

determine that a price of the received contra order is within a predetermined delta of a price of the best order; and

wherein determining that the participant has the right to trade exclusively against the received contra order comprises;

determining that the participant has the right to trade exclusively against the received contra order based at least in part on determining that the price of the received contra order is within the predetermined delta of the price of the best order.

25. The apparatus of claim 19,

wherein the orders pending at the conclusion of the first trading state comprise bids pending at the conclusion of the first trading state;

wherein the best order comprises a bid having a best price from among the pending bids; and

wherein the received contra order comprises an offer.

26. The apparatus of claim 19,

wherein the orders pending at the conclusion of the first trading state comprise offers pending at the conclusion of the first trading state;

wherein the best order comprises an offer having a best price from among the pending offers; and

wherein the received contra order comprises a bid.

27. The apparatus of claim 19, wherein the software, when executed by the at least one processor, further directs the at least one processor to:

based at least in part on awarding the participant with the potential trading priority, automatically modify the best order, wherein modifying the best order does not affect the potential trading priority of the participant.

28. The apparatus of claim 27, wherein modifying the best order comprises at least one of:

modifying a size of the best order, and

modifying a price of the best order.

29. The apparatus of claim 27,

wherein the best order comprises a bid;

and

wherein modifying the best order comprises at least one of;

reducing a size of the bid, and

reducing a price of the bid.

30. The apparatus of claim 27,

wherein the best order comprises a offer;

and

wherein modifying the best order comprises at least one of;

reducing a size of the offer, and

increasing a price of the offer.

31. The apparatus of claim 27, wherein the at least one processor automatically modifies the best order based at least in part on instructions preset by the participant.

32. The apparatus of claim 27, wherein the at least one processor automatically modifies the best order based at least in part on a preset default of the apparatus.

33. The apparatus of claim 19,

wherein the best order comprises (i) a hidden size not shown to other participants and (ii) a displayed size shown to other participants;

and

wherein the hidden size and the displayed size are considered in determining that the size of the best order satisfies the minimum size requirement.

34. The apparatus of claim 19,

wherein the best order comprises (i) a hidden size not shown to other participants and (ii) a displayed size shown to other participants;

and

wherein only the displayed is considered in determining that the size of the best order satisfies the minimum size requirement.

35. The apparatus of claim 19, wherein the at least one processor automatically executes the trade against the received contra order based at least in part on instructions preset by the participant.

36. The apparatus of claim 19, wherein the at least one processor automatically executes the trade against the received contra order based at least in part on a preset default of the apparatus.