Systems and methods for trading at a price within a spread market

• US 20040193519A1
• Filed: 03/24/2003
• Published: 09/30/2004
• Est. Priority Date: 03/24/2003
• Status: Active Grant

• Current Assignee: BGC Partners LP (BGC Group, Inc.)
• Original Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Inventors: Lutnick, Howard W., Sweeting, Michael, Noviello, Joseph
• Granted Patent: US 7,827,089 B2
• Time in Patent Office: Days
• 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

A system and method is provided to allow traders to submit midprice orders to trade at a price within a spread of a market, preferably at the midpoint of a spread market, while maintaining anonymity of the midprice order. A midprice order is anonymous because other traders do not know whether the submitted midprice orders are orders to buy or orders to sell. A midprice order may remain active until it is traded with a contra midprice order or until a parameter associated with the order is breached, thereby resulting in cancellation of the midprice order.

Claims

1. A method for trading a particular item within a spread market for said item, said method being implemented on an electronic trading system, said method comprising:

receiving a midprice order to buy or sell said item at a price within said spread market; and

trading at least a portion of said midprice order with at least one previously submitted midprice order.

2. The method of claim 1, wherein said price is determined by using the price in the middle of said spread market.

3. The method of claim 1, wherein said price is a calculated price.

4. The method of claim 1, further comprising assigning at least one parameter to said midprice order.

5. The method of claim 4, further comprising cancelling said midprice order when said at least one parameter is no longer satisfied.

6. The method of claim 1, wherein when said midprice order is received, said order is substantially immediately traded.

7. The method of claim 1, wherein said trading comprises matching said midprice order with said at least one previously submitted midprice order that is contra to said midprice order.

8. The method of claim 1, further comprising queuing an untraded portion of said midprice order for use in subsequent trading.

9. The method of claim 1, wherein the buy/sell orientation of said midprice order is anonymous such that market participants do not know whether said midprice order is an order to buy or an order to sell.

10. The method of claim 1, further comprising displaying a signifying mark to indicate to market participants that at least one midprice order is active in said trading system.

11. A system for trading a particular item within a spread market for an item comprising:

a workstation that receives a midprice order to buy or sell said item at a price within said spread market; and

a server that receives said midprice order from said workstation, said server that trades said midprice order with at least one previously submitted midprice order.

12. The system of claim 11, wherein said price is determined by using the price in the middle of said spread market.

13. The system of claim 11, wherein said price is a calculated price.

14. The system of claim 11, wherein said server assigns at least one parameter to said midprice order.

15. The system of claim 14, wherein said server cancels said midprice order when said at least one parameter is no longer satisfied.

16. The system of claim 11, wherein when said server receives said midprice order, said order is substantially immediately traded.

17. The system of claim 11, wherein said server matches said midprice order with said at least one previously existing midprice order that is contra to said midprice order.

18. The system of claim 11, wherein said server queues an untraded portion of said midprice order for use in a subsequent trade.

19. The system of claim 11, wherein the buy/sell orientation of said midprice order is anonymous such that market participants do not know whether said midprice order is an order to buy or an order to sell.

20. The system of claim 11, wherein said workstation displays a signifying mark to indicate that at least one midprice order is active.

21. A method for trading a particular item within a spread market, said method being implemented in an electronic trading system, said method comprising:

receiving a first midprice order to buy or sell said item at a price within said spread market;

receiving a second midprice order to buy or sell said item at a price within said spread market;

when said second midprice order is contra to said first midprice order, matching at least of portion of said second midprice order with said first midprice order; and

when said second midprice order is not contra to said first midprice order, queuing said second midprice order in a predetermined queue.

22. The method according to claim 21, further comprising displaying a signifying mark to show that at least one midprice order is active for trading at the midpoint of said spread market.

23. The method according to claim 21, further comprising:

assigning at least one parameter to said first midprice order and to said second midprice order;

cancelling said first midprice order if its said at least one parameter is no longer satisfied; and

cancelling said second midprice order if its said at least one price parameter is no longer satisfied.

24. The method according to claim 21, wherein said price at which said first and second orders are matched is determined by using the price in the middle of said spread market.

25. The method according to claim 21, wherein said price at which said first and second orders are matched is determined by using an algorithm.

26. The method according to claim 21, further comprising receiving a third midprice order to buy or sell said item at a price within said spread market.

27. The method according to claim 26, further comprising:

matching said third midprice order to said first midprice order if said third and first midprice orders are contra to each other; and

if said third midprice order is unfilled, matching said third midprice order to said second midprice order if said third and second midprice orders are contra to each other.

28. The method according to claim 23, wherein a system sets said at least one parameter.

29. The method according to claim 23, wherein a market participant sets said at least one parameter.

30. The method according to claim 21, wherein a midprice order to buy is contra to a midprice order to sell.

31. A system for trading within a spread market for a tradable item, said system comprising:

a first workstation that receives a first midprice order to buy or sell said item at a price within said spread market;

a second workstation that receives a second midprice order to buy or sell said item at a price within said spread market;

a server that;

when said second midprice order is contra to said first midprice order, matching at least of portion of said second midprice order with said first midprice order; and

when said second midprice order is not contra to said first midprice order, queuing said second midprice order in a predetermined queue.

32. The system according to claim 31, wherein said workstations display a signifying mark to show that at least one midprice order is active for midprice trading.

33. The system according to claim 31, wherein said server assigns at least one parameter to said first midprice order and to said second midprice order;

said server cancels said first midprice order when its said at least one parameter is no longer satisfied; and

said server cancels said second midprice order when its said at least one parameter is no longer satisfied.

34. The system according to claim 31, wherein said price that said server matches said first and second midprice orders is determined by using the price in the middle of said spread market.

35. The system according to claim 31, wherein said server uses an algorithm to determine said price at which said first and second midprice orders are matched.

36. The system according to claim 31, further comprising receiving a third midprice order to buy or sell said item a price within said spread market.

37. The system according to claim 36, wherein said server:

matches said third midprice order to said first midprice order if said third and first midprice orders are contra to each other; and

if said third midprice order is unfilled, matches said third midprice order to said second midprice order if said third and second midprice orders are contra to each other.

38. The system according to claim 33, wherein said system sets said at least one parameter.

39. The system according to claim 33, wherein a market participant sets said at least one parameter.

40. The system according to claim 31, wherein a midprice order to buy is contra to a midprice order to sell.