Trading related to fund compositions

• US 8,712,903 B2
• Filed: 09/25/2008
• Issued: 04/29/2014
• Est. Priority Date: 09/25/2008
• Status: Active Grant

• Current Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Original Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Inventors: Lutnick, Howard W., Alderucci, Dean P., Fishkind, Andrew, Gay, Brian L., Foley, Kevin, Miller, Mark, Plott, Charles
• Primary Examiner(s): Shrestha, Bijendra K
• Application Number:
  US12/237,976
• Publication Number:
  US 20100076884A1
• Time in Patent Office: 2,042 Days
• Field of Search: 705/37
• US Class Current: 705/37
• CPC Class Codes: G06F 16/9538 Presentation of query results
• CPC Class Codes: G06Q 30/08 Auctions
• 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

An electronic marketplace uses a fund composition to guide trading opportunities. Mutual funds typically have a target composition of financial instruments. When prices change for constituents of such a mutual fund, the fund typically needs to rebalance in order to maintain a desired composition. A marketplace that understands the target composition and the movement in prices targets trading opportunities to a fund in a more tailored manner than a traditional marketplace.

Claims

1. A method comprising:

receiving, by an electronic marketplace, an indication of a composition of mutual fund, in which the composition includes a plurality of financial instruments that the fund targets for ownership and respective percentages of the composition that the fund targets for ownership in each financial instrument;

receiving, by the marketplace, an indication of an order, in which the order defines a side of a trade for a financial instrument;

determining, by the marketplace, that the financial instrument is part of the composition of the fund based on the received indication of the composition;

determining, by the marketplace, a change in price that includes an increase or decrease in the price of the financial instrument;

determining, by the marketplace, that an operator of the fund is likely to be interested in an opposite side of the trade for the financial instrument based on the increase or decrease in price of the financial instrument and the determination that the financial instrument is part of the composition; and

in response to determining that the operator is likely to be interested, transmitting, by the marketplace to the fund, a query asking if an offer to enter into a trade that fulfills at least a portion of the order is accepted by the operator of the fund;

determining, by the marketplace, that the offer to enter into the trade is accepted by the operator of the fund based on determining that a matching order to the order is stored in an order management system associated with the fund that makes up part of a dark pool of liquidity;

facilitating an execution of the trade, by the marketplace, without a negotiation about a price of the trade and a quantity of financial instruments in response to the determination that the offer is accepted.

2. The method of claim 1, in which the price change includes an increase in the price, the side of the trade includes an offer to buy the financial instrument, and in which the determination that the operator is likely is based on the increase and the offer.

3. The method of claim 2, in which the increase includes an increase relative to other financial instruments of the composition.

4. The method of claim 1, in which the price change includes a decrease in the price, the side of the trade includes an offer to sell the financial instrument, and in which the determination that the operator is likely is based on the decrease and the offer.

5. The method of claim 4, in which the decrease includes a decrease relative to other financial instruments of the composition.

6. The method of claim 1, in which transmitting the query includes

transmitting a first information asking if the matching order to the order is stored in the order management system;

transmitting a second information asking if the offer is accepted; and

receiving an indication of the acceptance of the offer.

7. The method of claim 6, in which transmitting the first information and the second information are part of transmitting the query to a computer system configured to interpret the query as asking if the matching order is stored in the order management system and, if the matching order is stored in the order management system, if the offer is accepted.

8. The method of claim 1, in which facilitating the execution includes facilitating the execution without initiating a negotiation about a price and without initiating a negotiation about a quantity.

9. The method of claim 1, in which facilitating the execution includes facilitating the execution with a price and a quantity that may be identified from the query.

10. The method of claim 1, comprising suppressing evidence of the transmission of the query.

11. The method of claim 1, in which if the opposite side of the trade includes a sale of the financial instrument, then the operator is determined to be interested if the price change includes an increase.

12. The method of claim 1, in which if the opposite side of the trade includes a buy of the financial instrument, then the operator is determined to be interested if the price change includes a decrease.

13. The method of claim 1, in which the order includes a firm order.

14. The method of claim 1, in which the order includes a non-firm order.

15. The method of claim 1, in which the change in price includes a change in price from a receipt of the indication of the composition.

16. The method of claim 1, comprising:

determining that a transmission of a second query regarding a second order should not be transmitted to the fund based on the change in price and the second order being for the opposite side of the trade.

17. The method of claim 1, comprising:

determining that other fund operators of other funds are likely to be interested in the opposite side of the trade based on other fund compositions of the other funds and the price change; and

in response to the determination that the other fund operators are likely to be interested, transmitting other queries regarding the order to the other funds.

18. The method of claim 1, comprising:

receiving other orders that define the side of the trade; and

in response to determining that the operator is likely to be interested, transmitting other queries regarding the other orders to the fund.

20. The method of claim 1, in which the marketplace is a trading platform.

19. An apparatus comprising:

a computing device of an electronic marketplace; and

a non-transitory medium having stored thereon a plurality of instructions that when executed by the computing device, cause the computing device to perform a method comprising;

receiving an indication of a composition of mutual fund, in which the composition includes a plurality of financial instruments that the fund targets for ownership and respective percentages of the composition that the fund targets for ownership in each financial instrument;

receiving an indication of an order, in which the order defines a side of a trade for a financial instrument;

determining that the financial instrument is part of the composition of the fund based on the received indication of the composition;

determining a change in price that includes an increase or decrease in the price of the financial instrument;

determining, by the marketplace, that an operator of the fund is likely to be interested in an opposite side of the trade for the financial instrument based on the increase or decrease in price of the financial instrument and the determination that the financial instrument is part of the composition; and

in response to determining that the operator is likely to be interested, transmitting, by the marketplace to the fund, a query asking if an offer to enter into a trade that fulfills at least a portion of the order is accepted by the operator of the fund;

determining that the offer to enter into the trade is accepted by the operator of the fund based on determining that a matching order to the order is stored in an order management system associated with the fund that makes up part of a dark pool of liquidity,

facilitating an execution of the trade without a negotiation about a price of the trade and a quantity of financial instruments in response to the determination that the offer is accepted.