System and method for the automated brokerage of financial instruments

• US 8,612,321 B2
• Filed: 08/06/2008
• Issued: 12/17/2013
• Est. Priority Date: 10/22/2003
• Status: Active Grant

• Current Assignee: Scottrade Incorporated (Charles Schwab Corporation)
• Original Assignee: Scottrade Incorporated (Charles Schwab Corporation)
• Inventors: Tully, Michael James, Scott, Virgil Michael, Randle, Dwayne Oliver, Lembree, Gregory Paul
• Primary Examiner(s): JOHNSON, GREGORY L
• Application Number:
  US12/187,042
• Publication Number:
  US 20090037320A1
• Time in Patent Office: 1,959 Days
• Field of Search: None
• 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

Disclosed herein in a preferred embodiment is an automated financial instrument brokerage system wherein a front end layer interacts with customers to generate activity requests for an intermediate layer. The intermediate layer preferably processes the activity requests and places financial instrument orders on a financial market if appropriate. A backend layer preferably provides data to the intermediate layer for processing activity requests. Multiple heterogeneous front end customer applications may be supported by the same intermediate layer. Further, multiple backend layer applications may interact with the intermediate layer in a manner transparent to the front end layer. Further, scalability can be achieved be partitioning various tasks of the intermediate layer onto separate servers, and more preferably on separate redundant servers. Load balancers may then be used in the intermediate layer to provide distributed access to these servers. Also disclosed herein is a caching technique whereby turnaround time for processing activity requests can be reduced by reducing the number of times that the intermediate layer needs to interact with the backend layer.

Claims

1. An automated financial instrument brokerage system for providing administrative control over financial instrument orders allowed by the system, the system comprising:

a computer-implemented database in which order restrictions are stored;

a computer-implemented interface configured to allow an administrator to control the restrictions that are stored in the database; and

a processor configured to (1);

process an order activity request received by an application in response to user input against the restrictions stored in the database to determine whether the order activity request is valid, and (2);

reject the order activity request if it is determined to be invalid;

wherein the interface is configured to provide the administrator with selective control of the stored restrictions on a trading symbol-specific basis, the selective control over the trading symbol-specific restrictions including a plurality of controls for controlling a plurality of conditions under which orders can be placed for a financial instrument corresponding to an administrator-defined trading symbol, the plurality of controls comprising at least two selected from the group consisting of a routing control, an order type control, an extended hours trading control, an option chaining control, a minimum lot size control, a margin requirement control, and an add disallowed option root or symbol control;

wherein the brokerage system comprises;

a front end layer comprising at least one front end server, the at least one front end server comprising the processor, the at least one front end server configured to receive, via an application, a plurality of activity requests related to one or more financial instruments from a plurality of remote users;

an intermediate layer in communication with the front end layer, the intermediate layer comprising a plurality of intermediate layer servers for simultaneously processing a plurality of the activity requests, the intermediate layer servers being configured to provide a plurality of services in connection with the processing of the activity requests;

a back end layer in communication with the intermediate layer, the back end layer comprising a data source configured to provide financial instrument quote data, a data repository configured to store customer account data, and an order placement system configured to place one or more orders on a financial instrument trading market, the one or more orders being derived from at least one received activity request;

wherein the processor is further configured to execute an interface between the application and the intermediate layer, the interface including a plurality of trading rules corresponding to the stored restrictions such that received order activity requests are processed against the stored restrictions to determine whether to reject a received order activity request;

wherein the at least one front end server is further configured to distribute activity requests including order activity requests that were not rejected based on the stored restrictions to the plurality of intermediate layer servers based on activity request type;

wherein the intermediate layer servers are configured to interact with the back end layer data source, the back end layer data repository, and the back end layer order placement system as necessary to process the received activity requests; and

wherein the intermediate layer servers comprise a plurality of dedicated servers, the dedicated servers comprising;

a plurality of order servers, each order server configured to receive and process order activity requests from the front end layer that were not rejected based on the stored restrictions;

a plurality of customer account servers, each customer account server configured to receive and process customer account activity requests from the front end layer, wherein the processing of customer account activity requests includes interacting with the back end layer data repository to retrieve customer account data therefrom and providing the retrieved customer account data to the front end applications for display to the users; and

a plurality of quote servers, each quote server configured to receive and process quote activity requests from the front end layer, wherein the processing of quote activity requests includes interacting with the back end layer data source to retrieve the financial instrument quote data therefrom and providing the retrieved financial instrument quote data to the front layer applications for display to the users.

2. The system of claim 1 wherein the database resides in the intermediate layer.

3. The system of claim 1 wherein the order type control comprises at least one selected from the group consisting of a buy order control, a sell order control, a sell short order control, a buy to cover order control, a buy to open order control, a buy to close order control, a sell to open order control, and a sell to close order control.

4. The system of claim 1 wherein the interface is further configured to provide the administrator with selective control over the stored restrictions on a trading market-specific basis.

5. The system of claim 4 wherein the interface is further configured to provide the administrator with selective control over the stored restrictions on an option-specific basis.

6. The system of claim 1 wherein the interface is further configured to provide the administrator with selective control over the stored restrictions on an option-specific basis.

7. An automated financial instrument brokerage system for providing administrative control over financial instrument orders allowed by the system, the system comprising:

a computer-implemented database in which order restrictions are stored;

a computer-implemented interface configured to allow an administrator to control the restrictions that are stored in the database; and

a processor configured to (1);

process an order activity request received by an application in response to user input against the restrictions stored in the database to determine whether the order activity request is valid, and (2);

reject the order activity request if it is determined to be invalid;

wherein the interface is configured to provide the administrator with selective control of the stored restrictions on a trading market-specific basis;

wherein the trading market-specific control comprises a control for governing orders on the NYSE, a control for governing orders on the NASDAQ, and a control for governing orders on the AMEX;

wherein the brokerage system comprises;

a front end layer comprising at least one front end server, the at least one front end server comprising the processor, the at least one front end server configured to receive, via an application, a plurality of activity requests related to one or more financial instruments from a plurality of remote users;

an intermediate layer in communication with the front end layer, the intermediate layer comprising a plurality of intermediate layer servers for simultaneously processing a plurality of the activity requests, the intermediate layer servers being configured to provide a plurality of services in connection with the processing of the activity requests;

a back end layer in communication with the intermediate layer, the back end layer comprising a data source configured to provide financial instrument quote data, a data repository configured to store customer account data, and an order placement system configured to place one or more orders on a financial instrument trading market, the one or more orders being derived from at least one received activity request;

wherein the processor is further configured to execute an interface between the application and the intermediate layer, the interface including a plurality of trading rules corresponding to the stored restrictions such that received order activity requests are processed against the stored restrictions to determine whether to reject a received order activity request;

wherein the at least one front end server is further configured to distribute activity requests including order activity requests that were not rejected based on the stored restrictions to the plurality of intermediate layer servers based on activity request type;

wherein the intermediate layer servers are configured to interact with the back end layer data source, the back end layer data repository, and the back end layer order placement system as necessary to process the received activity requests; and

wherein the intermediate layer servers comprise a plurality of dedicated servers, the dedicated servers comprising;

a plurality of order servers, each order server configured to receive and process order activity requests from the front end layer that were not rejected based on the stored restrictions;

a plurality of customer account servers, each customer account server configured to receive and process customer account activity requests from the front end layer, wherein the processing of customer account activity requests includes interacting with the back end layer data repository to retrieve customer account data therefrom and providing the retrieved customer account data to the front end applications for display to the users; and

a plurality of quote servers, each quote server configured to receive and process quote activity requests from the front end layer, wherein the processing of quote activity requests includes interacting with the back end layer data source to retrieve the financial instrument quote data therefrom and providing the retrieved financial instrument quote data to the front layer applications for display to the users.

8. The system of claim 7 wherein the database resides in the intermediate layer.

9. An automated financial instrument brokerage system for providing administrative control over financial instrument orders allowed by the system, the system comprising:

a computer-implemented database in which order restrictions are stored;

a computer-implemented interface configured to allow an administrator to control the restrictions that are stored in the database; and

a processor configured to (1);

process an order activity request received by an application in response to user input against the restrictions stored in the database to determine whether the order activity request is valid, and (2);

reject the order activity request if it is determined to be invalid;

wherein the interface is configured to provide the administrator with selective control of the stored restrictions on an option-specific basis;

wherein the brokerage system comprises;

a front end layer comprising at least one front end server, the at least one front end server comprising the processor, the at least one front end server configured to receive, via an application, a plurality of activity requests related to one or more financial instruments from a plurality of remote users;

an intermediate layer in communication with the front end layer, the intermediate layer comprising a plurality of intermediate layer servers for simultaneously processing a plurality of the activity requests, the intermediate layer servers being configured to provide a plurality of services in connection with the processing of the activity requests;

a back end layer in communication with the intermediate layer, the back end layer comprising a data source configured to provide financial instrument quote data, a data repository configured to store customer account data, and an order placement system configured to place one or more orders on a financial instrument trading market, the one or more orders being derived from at least one received activity request;

wherein the processor is further configured to execute an interface between the application and the intermediate layer, the interface including a plurality of trading rules corresponding to the stored restrictions such that received order activity requests are processed against the stored restrictions to determine whether to reject a received order activity request;

wherein the at least one front end server is further configured to distribute activity requests including order activity requests that were not rejected based on the stored restrictions to the plurality of intermediate layer servers based on activity request type;

wherein the intermediate layer servers are configured to interact with the back end layer data source, the back end layer data repository, and the back end layer order placement system as necessary to process the received activity requests; and

wherein the intermediate layer servers comprise a plurality of dedicated servers, the dedicated servers comprising;

a plurality of order servers, each order server configured to receive and process order activity requests from the front end layer that were not rejected based on the stored restrictions;

a plurality of customer account servers, each customer account server configured to receive and process customer account activity requests from the front end layer, wherein the processing of customer account activity requests includes interacting with the back end layer data repository to retrieve customer account data therefrom and providing the retrieved customer account data to the front end applications for display to the users; and

a plurality of quote servers, each quote server configured to receive and process quote activity requests from the front end layer, wherein the processing of quote activity requests includes interacting with the back end layer data source to retrieve the financial instrument quote data therefrom and providing the retrieved financial instrument quote data to the front layer applications for display to the users.

10. The system of claim 9 wherein the database resides in the intermediate layer.