Automated stock exchange

• US 4,412,287 A
• Filed: 09/15/1982
• Issued: 10/25/1983
• Est. Priority Date: 05/29/1975
• Status: Expired due to Fees

• Current Assignee: Braddock W. David III
• Original Assignee: Braddock W. David III
• Inventors: Braddock, Walter D. III
• Primary Examiner(s): Gruber, Felix D.
• Application Number:
  US06/418,297
• Time in Patent Office: 405 Days
• Field of Search: 364/200, 364/300, 364/408, 364/900
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: H04L 12/1804 for stock exchange and similar applications

Abstract

An automated stock exchange in which a computer matches buy and sell orders for a plurality of stocks. An open board simultaneous trading environment is simulated through two stages. The first stage is an order accumulation period which is continuously in operation except for one stock in the second stage. The second stage is an extremely rapid sequential call through. All orders for a given stock are available to customers during the first stage. During the second stage market orders are matched with market orders, then market orders are traded against limit orders as the trading price changes within controlled ranges. The system will also process stop orders, and other specialized transactions.

Claims

1. The method of operating a computer to process data records containing information about transactions in fungible goods, such as securities, which are produced by a data input device and generating an output display comprising the steps of:

(a) storing in a designated area all data records relating to each security,

(b) processing the data records relating to a first security in sequence in accordance with the following steps,

(c) sorting the data records into a first subset, each containing information including a customer identifier, an offer to buy, an associated price, and the number of shares of the security, hereinafter limit buy orders, in a priority sequence beginning with the highest price,

(d) sorting the data records into a second subset, each containing information including a customer identifier, an offer to sell, an associated price, and the number of shares of the security, hereinafter limit sell orders, in a priority sequence beginning with the lowest price,

(e) sorting the data records into a third subset, each containing information including a customer identifier, an offer to buy at the market, and an order time, hereinafter market buy order, in a priority sequence beginning with the earliest time,

(f) sorting the data records into a fourth subset, each containing information including a customer identifier, an offer to sell at the market, and an order time, hereinafter market sell orders, in a priority sequence beginning with the earliest time,

(g) sorting the data records into a fifth subset, each containing information including a customer identifier, an offer to buy at the market above a certain or stop buy price, hereinafter stop buy orders, into a priority sequence beginning with the lowest stop buy price,

(h) sorting the data into a sixth subset, each containing information including a customer identifier, an offer to sell at the market below a certain or stop sell price, hereinafter stop sell orders, into a priority sequence beginning with the highest stop sell price,

(i) storing within said designated area, in a seventh subset, a data record containing the price of the latest transaction of said security, hereinafter the last trade price,

(j) comparing each data record in said first subset with the record in said seventh subset to identify those records having a limit buy price above the last trade price,

(k) comparing each data record in said second subset with the record in said seventh subset to identify those records having a limit sell price below the last trade price,

(l) processing each such identified data record in said first subset in priority sequence against such identified records in said second subset at the last trade price, until the identified records of one subset are exhausted,

(m) merging said processed records into new records stored in an eighth subset of data records relating to said security, said records containing a puchaser identifier, a seller identifier, a transaction price and an identifier for the number of shares in the transaction,

(n) comparing each data record in said fifth and sixth subsets with said data record in said seventh subset to determine the stop buy orders at or below the last trade price and the stop sell orders at or above the last trade price and moving each such record to the end of the third and fourth subsets of data records,

(o) comparing each of the data records in said first and second subsets to identify either limit buy orders at or above the last trade price or limit sell orders at or below the last trade price,

(p) merging said identified records of limit order from said first or second subsets of data against opposed records of market orders at the last trade price and adding said new records to said eighth subset of data records, until the identified records in said first or second subset are exhausted,

(q) merging the records of market orders from said third and fourth subsets of data at the last trade price and adding said records to said eighth subset of data records, until the identified records in said third or fourth subset are exhausted,

(r) merging the remaining records of market orders from the unexhausted third or fourth subset of data against the records, in sequence of the records of limit orders of the second or first subset of data at the limit price until one of such subsets of records are exhausted,

(s) comparing each such record added to the eighth subset with the record in the seventh subset to update the value of the last trade, according to the result of the comparison,

(t) transferring control to process the data records relating to the next security.